[Samurai]

Originally Posted by speedmiester

More trouble for world's "most valued" Edtech company.

Ed tech is a joke across the spectrum. Almost all companies in this domain act like they are saving the world. In reality, they are either scamming the customers and investors or simply delusional.

Here is another such company which has mostly escaped media scrutiny.

Doubt clearing edtech firm Doubtnut had raised about $50 million total funding, including a $31 million Series B round in February 2021, but the company didn’t focus on monetisation until FY22. Sources say that the strategy of hacking growth now and figuring out monetisation later has taken a heavy toll on the Bengaluru-based edtech firm.

Really? Maybe no one who understood economics was part of their senior management.

Here is their growth story just using headlines from Crunchbase. Just start reading from below and go up. It reads like a joke.

[V.Narayan]

Originally Posted by Samurai

Ed tech is a joke across the spectrum. Almost all companies in this domain act like they are saving the world. In reality, they are either scamming the customers and investors or simply delusional.

Here is another such company which has mostly escaped media scrutiny.

Thank you Samurai san. The world economy is jam packed with super rich and uber rich individuals and funds of various kinds that instead of putting their money, or at least some of it, to use for the good of humanity are more keen on making that money multiply. Some of this is legit money some is not. But most of it finds its way into PE funds by whatever name called. Hence this desperation over the last 2+ decades to deploy the cash at all costs. This shockingly shoddy quality of investment philosophies and due diligence are the result.

For example, my alma mater in USA is sitting on literally billions of $ of funds but they are more focused on investments and making the money grow rather than opening up 10,000 more scholarships so that students don't need to take loans. Priorities are messed up like there is no tomorrow. The alumni association has tabled this a hundred times to only limited avail. This is repeating itself a thousand times across the globe and that is where unscrupulous PE's and investee companies thrive in the dark where sunlight can't reach.

[Naetik30]

Every sane parent that had interacted with BYJU's clearly knew back in 2020 that this was a BIG scam. Can easily be compared to the time share holiday plan salesmen. Pretty much similar strategy. I am unwilling to believe that the huge VCs did not know this.

The only way to make sense of this. Simple Pump and dump. Pump up the price in every round of funding. In most cases the same investors buying at higher valuation in the next round. And pretty sure it will be the retail investors who will be left holding the bag once the IPOs kick off. In the case of BYJUs - just watch what happens after the Akash IPO is done and dusted.

Its always the retail middle income folks who have to help the super rich make money. God is cruel.

[kushagra452]

"More Startups Throw in the Towel, Unable to Raise Money for Their Ideas" WSJ article. June 9, 2023.

https://www.wsj.com/articles/more-st...ideas-eff8305b

[DiMaGo]

I have been a silent lurker in this thread for quite sometime. But, it bugs me that these VCs who spill their money [hard earned?] at the drop of a hat to ideas alone but do not care to even actually 'venture' into areas like:
- Small scale agri finance
- Health or health care loans to indviduals
- Small scale loans to Education
- etc.to name a few.
Yes, there may be few in the areas which I have listed above. But, what is stopping these 'high worth' individuals in investing and further democratisizing those areas/fields.
And evaluation, of some of the companies in which they would have invested, as rightly pointed out by many in this thread, is highly bubbled up.

In the early 1990's or even in the early 2000's investing in a company was more on the lines of:
- What is the company into?
- What is its current net-worth?
- What is the qualification and experience of the people owning it?
- And how many customers do they serve and their satisfaction ratings
- Does the founder/s have a long term vision for the company

However, these days its more of:
- Is the current owner from a ivy league B school? If yes, which one? [Foreign universities, IITs, IIMs and the likes]
- Is it the first time founder founding a startup?
- How 'media savvy' and advertisement friendly is the founder?

The fundamental question I have to most of the VCs is 'Why not invest in something which adds value and gives back to society than burn money on just "ideas" which give limited returns'?
Call me old school, but, I am of the opinion that most of the start ups these days are here for only limited time [to make fast cash] and they lack long-term vision.
People or companies who indeed have long term vision are either gobbled up by other startups with deep pockets or simply unable to withstand the on-slaught of these "higher value" startups and be killed in the process.

I know of few friends who are in the 'Game of Startups' and they openly proclaim they are there for 'Fast money' and they are ready to sell their ideas if the money is right. And such attitude, most often, results in the companies taking losses, firing people, fluctuating in their percieved 'Value'.
I think we are setting the Young generation a very false narrative of 'Success' resulting in such scenarios. [Let this discussion be for another day].

[am1m]

Originally Posted by DiMaGo

...the Young generation a very false narrative of 'Success' resulting in such scenarios.

This is nothing unique to any generation. Get rich schemes, ponzi, pump-and-dump, snake oil, pyramid/multi-level marketing, dot com bust (since you referred to early 2000s investor philosophies- I saw half my team at my first job sacked in 2002 when this particular bubble burst!), subprime mortgage, etc etc.

Every generation, industry, and sector will have people susceptible to these make money easy/quick schemes and so people who will take advantage of that. Young or old. There is nothing special about any older generation that made them immune to basic human desires.

[DiMaGo]

Originally Posted by am1m

This is nothing unique to any generation. Get rich schemes, ponzi, pump-and-dump, snake oil, pyramid/multi-level marketing, dot com bust (since you referred to early 2000s investor philosophies- I saw half my team at my first job sacked in 2002 when this particular bubble burst!), subprime mortgage, etc etc.

However, the founders of such ponzi schemes, snake oil [that was a good one] etc. were never glorified and were never given as examples of 'who to be in life'.

Originally Posted by am1m

Every generation, industry, and sector will have people susceptible to these make money easy/quick schemes and so people who will take advantage of that. Young or old. There is nothing special about any older generation that made them immune to basic human desires.

Well a huge pile of money is just being burnt in these startups and the value add is minimal. Am not saying here that making money is bad, however, in the desire to make quick money, lot of ideals, vision, and true value [of money and people] are being lost or compromised to a great extent.

[warrioraks]

Originally Posted by DiMaGo

I have been a silent lurker in this thread for quite sometime. But, it bugs me that these VCs who spill their money [hard earned?] at the drop of a hat to ideas alone but do not care to even actually 'venture' into areas like:
- Small scale agri finance
- Health or health care loans to indviduals
- Small scale loans to Education
- etc.to name a few.
Yes, there may be few in the areas which I have listed above. But, what is stopping these 'high worth' individuals in investing and further democratisizing those areas/fields.

You emphasized on the 'venture' word in VCs but maybe missed what the second word meant. These guys are called Venture Capitalists and not Venture Socialists for a reason.
Democratizing education, finance, and other socialistic schemes is not part of the job description here.

Originally Posted by DiMaGo

In the early 1990's or even in the early 2000's investing in a company was more on the lines of:
- What is the company into?
- What is its current net-worth?
- What is the qualification and experience of the people owning it?
- And how many customers do they serve and their satisfaction ratings
- Does the founder/s have a long term vision for the company

I seriously doubt this. Harshad Mehta and Ketan Parekh scams are a testament. If retail investors were really doing so much due-diligence, the collateral damage would have been way lesser.

Throughout history, people have fallen prey to their greed. The stock market is no different. Sharing a satirical video from Jaspal Bhatti around how greed and herd mentality drives people to bet their hard earned money on IPOs and stock markets without adequate market research. For folks who understand Hindi, it's a fun watch.

https://www.youtube.com/watch?v=oRtKF6Auc44

[DiMaGo]

Originally Posted by warrioraks

You emphasized on the 'venture' word in VCs but maybe missed what the second word meant. These guys are called Venture Capitalists and not Venture Socialists for a reason.
Democratizing education, finance, and other socialistic schemes is not part of the job description here.

My words are being misread.
All am trying to say to the start ups and VCs is Do Not burn money [which am sure most of the populace in this thread agree] and invest wisely in Ventures that are equitable to society at large and in-turn make money from it.
So delivering groceries in 10 mins, imparting education [ed startups], etc. are part of Job descriptions of VCs? Not really; however, they are 'trying' to make money with these schemes/ventures.

Originally Posted by warrioraks

I seriously doubt this. Harshad Mehta and Ketan Parekh scams are a testament. If retail investors were really doing so much due-diligence, the collateral damage would have been way lesser.

Not sure how or why the stock market angle came in here. However, I think you've answered the question yourself. If a VC is not doing due diligence and investing millions of dollars and 'hoping' the startup will succeed, it will meet the same fate as the people you have mentioned.

PS: Always enjoyed watching Bhatti saab. The video you shared is funny [satiricial as well].

[NiInJa]

Originally Posted by DiMaGo

But, it bugs me that these VCs who spill their money [hard earned?] at the drop of a hat to ideas alone but do not care to even actually 'venture' into areas like:
- Small scale agri finance
- Health or health care loans to indviduals

The fundamental question I have to most of the VCs is 'Why not invest in something which adds value and gives back to society than burn money on just "ideas" which give limited returns'?

Actually, there are quite a few folks who work on amazing products/services and have VC funding done silently without all the noise and hype. It's just that they don't make the headlines. Sam Altman's comments aside, we Indians do have an excellent set of brains and there is lot of innovation going on as we speak. I am not going to detail the exact products/services they work on here, but I've seen at least four different individuals in my neighbourhood solving some problems very specific to India. I'm listing them here (most of these floated around during Covid times, post 2020)

1. Automated answer sheet checking software: Reduced government's cost of handing over physical answer sheets to the checkers. The software at this level automates checking single word answer, while a soft copy is sent over to the checkers, it also points out who is checking incorrectly, thus weeding out the checkers who are ruining some student's report cards!

2. Investment solution for defence forces: For personnel at lower ranks, many are still unclear on what they can do with the salary. This is like Paytm money app but specifically targeted on educating defence forces' personnel (especially immediate family members) and helping them with multiplying their hard earned money.

3. Packaging solution software: Enter the dimension of a product that needs to be packed and the software generates an exact pattern of folds and cuts (like origami) for packing it with minimum wastage of cardboard and maximum units per sheet (the sheet size manufactured is usually standard just like paper)

4. Courier services for high value art items: Not the usual DHL and Bluedart, they have a very robust transportation and tracking system specifically for high value, fragile art pieces. (You look at this guy driving a nondescript car and you won't even realize that he is dealing with some of the richest south east Asians and talking in crores of Indian Rupees every day )

There are lots of innovative solutions in farming as well, its just that we haven't been exposed to it. I've seen my colleague controlling his farm's water pump sitting in the office, monitoring using CCTV, getting weather updates on sms, using science to get maximum yield.

[warrioraks]

Originally Posted by DiMaGo

My words are being misread.
All am trying to say to the start ups and VCs is Do Not burn money [which am sure most of the populace in this thread agree] and invest wisely in Ventures that are equitable to society at large and in-turn make money from it.
So delivering groceries in 10 mins, imparting education [ed startups], etc. are part of Job descriptions of VCs? Not really; however, they are 'trying' to make money with these schemes/ventures.

Although I am not a fan of these VC-funded fast and loose startups, my post is going to come across as defending them. Still I will go ahead and type this unpopular opinion.

VCs don't make money on every bet. They throw money in as many opportunities as possible in the hope some of them gain big enough to generate profit and recover dead investment on others. This does not mean they are all out to burn money.

Everyone is an expert in hindsight, but one does not know at the time of investing which one is going to be a hit and what will be a full scale failure. If there was a way to find out, it's going to be a million dollar job in itself.

Originally Posted by DiMaGo

Not sure how or why the stock market angle came in here. However, I think you've answered the question yourself. If a VC is not doing due diligence and investing millions of dollars and 'hoping' the startup will succeed, it will meet the same fate as the people you have mentioned.

My bad, I misread your statement in context of stocks. Having said that, due-diligence does not guarantee success.

[akg7091]

There's a startup raising funds right now ( rhymes with glensta ) where the founder claimed to be a PhD - upon checking personally, his PhD turned out to be and the website of the "university" he got the PhD from redirects to a porn site ! No biggie, he just removed the Dr title from his linked in ! Claims all products are US FDA and NATO approved. Claims products being used by the Indian armed forces in the field where water availability is limited - but no real purchase orders from so called nato nations despite a year long special military operation in Ukraine.

Due diligence is a sham - none of the investors do any back ground checks. The retail guys will be left holding the bag once the pump and dump is done.

I was approached to invest - when I raised this issue with WFC they told me they didn't do any DD because they assumed bigger VCs had done it. I was "advised" not to pose such info in the common wa groups because it could affect the sentiments !

Such startups make all startups look like a scam

[anish]

Originally Posted by DiMaGo

My words are being misread.
All am trying to say to the start ups and VCs is Do Not burn money [which am sure most of the populace in this thread agree] and invest wisely in Ventures that are equitable to society at large and in-turn make money from it.
So delivering groceries in 10 mins, imparting education [ed startups], etc. are part of Job descriptions of VCs? Not really; however, they are 'trying' to make money with these schemes/ventures.

How does one decide which venture is equitable to the society at large ? How’s a 10 min grocery delivery service worse than a social picture sharing website ( Instagram) ?
When food delivery services started it was a vanity project with no real life use case. Today one can’t imagine life without zomato/Swiggy ? Fun fact - All these companies are still losing money on every order. So did Amazon for almost 6 years in a market like US.

Social impact - All the ecom companies (food/grocery/marketplaces/cab) provide job to 2.5 million plus individuals belonging to the lowest strata of the society. Imagine the number of families these companies have helped move beyond poverty in absence of any opportunities in the govt sector

[skrao]

My two cents on this. I have started multiple startups since 1999 and continue to run a successful one even now. There are three broad areas of issues especially with Indian start ups which will bite us very hard. 1. Believing that the Indian market is really large and hence forms a great opportunity. While on the surface this looks great, the Indian middle class which is the target of most of the start ups does not exist. If, for a moment we stop believing our own hype and critically look at the actual numbers of people who can consistently afford or use most of these services we will see that we are a much smaller market than numbers touted by most of us as Total Addressable Market.

[skrao]

Continuing my previous post
2. blindly aping models without seeing suitability to India, many startups and VCs are guilty of this feeding frenzy. 10-minute delivery, discounted e-commerce etc are not scalable or sustainable models. Most of these are built on labour or wage arbitrage. See the shortcuts that delivery boys/girls take to meet delivery times or the insane selling practices that are indulged in.
3. Chasing valuation ( which is abstract) vs value which is concrete. Eg For Byju's to really make money on the investment almost 100% of all IITJEE/NEET aspirants should join their courses, but they are a billion dollar Unicorn
4. Regulatory blindspots and U-turns, cost of compliance to complex rules, subjective interpretation and difficulty in getting justice quickly. Eg it takes years to recover a loan or to get a customer to pay if they play truant. Contract enforcement is one of the biggest hurdles in India. Changes to Rules are very arbitrary and can impact many business models, eg Angel tax, TCS on cards, tax withholding on payment to foreign professionals etc. recent Rule changes by RBI have pushed many fintech companies to the brink
5. Overall celebration of wealth no matter how acquired, we as a society have an insane obsession with celebrating "successful/ moneywise)" people. This creates a perverse need to acquire money, even through shortcuts
6. Culture of Jugaad, lasting and really good products take time and they are not hacks. Quality engineering is an abstract concept to many Indians
7. Culture of education/quality of education that is focussed on ranks, marks and memorizing rather than problem-solving, innovation, thinking through tough problems etc. Even the best IIT brains do not create good products
8. Lack of quality consciousness "acceptable" quality is a strangely Indian trait. See the recent rejection rates even in assembly by Apple, this is from a really good company like TVS. Imagine the fate of others.

Is it all black? no

1. There are genuine India problems, Affordable healthcare, agri credit, cold chain logistics, last mile connectivity, alternative fuel transport, low water agriculture, climate change mitigation technologies and hundreds more. We don't need yet another video app at insane amounts of VC money.
2. Make in India for the world, is still a great story and opportunity. Needs a systemic support structure right from education, to law to clarity on rules. See how China broke through or how Bangladesh/Vietnam/Indonesia are overcoming these specific challenges.
3. A better moral centering of what success means. We need to really understand why the same Satya Nadella/Sundar Pichai etc don't succeed in India.
4. We also need to create an environment of trust and no compromise on quality/jugaad.
5. Lastly we need a reality check, not hype