 about these seven sunshine sectors, which probably are going to be the next big love on the public space. So we're going to sort of further dive, deep dive with them on how these companies are going to go bigger in these sectors and what is the likely course that we are going to see. So starting with you, Mitesh, so within the larger realm of, let's say, education and sustainability and food, hospitality, we've seen some crazy investments happening in hotels and staycations and, you know, I mean, honestly, while we were putting together this not so big event, we could hardly find hotels because of the ICC World Cup, even in Mumbai, when it was actually happening in Ahmedabad. So, you know, we've seen some great investments coming into sectors. So what is your view and, you know, particularly in the times to come, what kind of sectors are going to draw big investments? I know the VC world has been a bit quiet, but having said that in between, they're having so many investments which have been happening. It might not be as vibrant as what we used to see like in 2020 or 2021, but still the number of investments are still pretty large. So what are your views and what key sectors is it that you're looking at? Thanks, thanks, Ritu. Well, I think our focus is largely sector agnostic and we truly believe that no sector is really boring. People have seen the highs that the EduTech or OTT content, right, or D2C brands enjoyed once point in time and suddenly you find them boring today for some investors. We believe that there are always gems in each of these sectors. So even within the so-called boring sectors, you'll find some great opportunities and even in some of the shining sectors, as we say, I think there will be duds. So rather than being sector specific, I think it's important to be intrapreneurs specific or the startup specific. Having said that, I think there are a few sectors which definitely are something which are looking very, very bright. Amongst the seven sectors that you yourself identified, clean tech is something which is really, it offers a lot of potential. Within fintech also some of the arms like inshore, tech and all, these are something which are really growing well. One interesting trend that we have also been observing is manufacturing tech, right? Something which was really considered traditional. Today there are some players which are emerging in this sector also, which are offering a lot of value addition to the overall manufacturing chain as well. So I think these are the few sectors that we really keep our eyes and ears open towards. Having said that, I think like I said, it's all about identifying great entrepreneurs and great startups within each of the sector who are able to perform well and which tend all the volatilities around themselves. I'm mentioning it, we're doing a complete session. So that's great. Just a small interruption, we also have our panelist, Ruchira joining virtually online. So she could please put her camera on. Ruchira waiting for you to put your camera on. Hi, Clowder please. So I know that the consumer sector and you've been always pro, even before DTC came a big thing, you've always been pro the consumer industry, FMCG industry, even prior to that. So particularly now with DTC as a channel that is there and consumer industry and overall the consumption on the rise, what are your views on the consumer sector? You know, we saw a big boom in the DTC sector, then it sort of plateaued and but we're still seeing some in between that keep on coming in the DTC sector which make it really, really promising. How do you see the resilience of the DTC sector? What changes do you see there? Sure. You know, we look at DTC more as a channel, as you pointed out, a lot of our earlier investments were offline first businesses, the likes of Sula, Viba, Sources, et cetera. So, you know, as a consumer fund, we are super excited about the next two decades for India as a country. You know, if you just look at where the per capita income is for India and if you look at the histories of countries like the US, China, et cetera, you know, you would see how the stars are aligned really well in terms of, you know, just the consumption boom that's said to happen over here. So, you know, and as a fund, we are super excited to support consumer founders and more importantly at this point in time in history because the next two decades, you know, we'll see a lot of insurgent brands, you know, doing really well. And then DTC is more a channel. I think what's clear is ever since the country opened up, I think the founders and investors have realized too, that they should be treating DTC as a channel and you know, and also understand the importance of offline if a brand has to scale up eventually. So, you know, I think if founders go about building their brand, treating DTC as a channel and not as the only channel where they do business in, I think they set themselves up well for success. So, yeah. And you know, food particularly is still, I think, nascent in the DTC space while we've seen a lot of investments in some big brands being created. So what opportunities do you see in food in the coming times? We just close to investments in food and again, the reason why food hasn't seen a lot of investment is it is a segment that has to be built in the offline channel, in the online channel, it's hard to make the unit economics work. But even there, the interesting development is the rise of quick commerce. So a lot of our food brands have been able to use quick commerce really well in order to get trials going, et cetera. But I think the short answer is, you know, any founder starting out in food should have a flair for offline and should have offline front and center from the early days onwards. Nitin, I'm gonna come to you. You know, as a country, I feel that we have some robust businesses which are spread all across, you know, in states you will find more than handful of businesses which are really strong family businesses or, you know, first generation businesses. But still I feel that the private equity play of, you know, investing in businesses and then getting them to go on the horses has still not been as evident in India as it is in a lot of Western countries. So where do you think we're lacking? And you know, where do businesses need more governance, more compliance to happen so that that side of investments can be increased? You know, we've seen young entrepreneurs getting funded but established entrepreneurs have not been able to raise the required funds, raise, or even sort of go to, you know, to do the PE route and then go to the IPO route. Thanks, great question and something we think about a lot. As a fund, Paragon is in many ways quite flexible in its investing. So we invest in VC startups, slightly scale startups kind of businesses and also more matured businesses. However, we are very excited about India as a growth sort of destination for various things that Nirmal has said and other panelists have also said. And also in addition, the way the entrepreneur ecosystem has evolved over the last even five years is quite astounding, right? I mean, I see the founders today and entrepreneurs are very passionate and very driven to make things happen and to grow. And to many such instances, they are able to grow with the digital ecosystem that has been developed over the last decade to get to a certain scale, right? So they'll get to, let's say, I'm taking just rough numbers but it will vary a lot depending on the sector, 200 to 300 crores kind of a number in sales. However, to get to what you've said, to get to bosses and to get to a listing, it needs to scale a lot more. And we believe that entrepreneurs with their sole grit and some key members of their team can get you to 300 crores odd revenue but to get from 300 crores to 2000 crore revenue, that takes extraordinary effort. And that's not just effort in grit and hard work and being smart about things but building the whole team out, right? To smart and really sharp capital allocation set governance right in the beginning, to set systems and processes to enable you to grow. And these are the things that few companies have succeeded and they've managed to cross the chasm if I may use that and go on the other side. But I think that a lot more education and a lot more hand holding is required of these founders and that's where people like us come in where we help them grow and scale not only just in revenues but with real sharp focus on cash flows and how the capital allocations happen and how the team is built out for the future growth. I think we are still in our nascent stage, I would say is the country where we haven't generated that many startups that mature enough, quick enough to enter the bosses today. But I believe in the next five to 10 years you will see a lot of startups coming. I think you're already seeing some trends in that direction and that will continue to gain momentum and more and more companies will cross that chasm. And you know, we love to see more, as you say SME businesses also sort of coming into the periphery and finding themselves into the zone that you just mentioned like 200,000 CR kind of and then going on because we feel that somehow they've lost all the limelight in the last few years because startups of course have been very aggressive but those robust businesses somehow have sort of taken a backseat which might want to move forward. Absolutely and if you just look at the number of companies in that zone, there are far too many companies in that zone. When we did some analysis of the data and looked at companies in the SME zone which are in that 100 to 300 pro range there is over 10,000 companies, right? And the number of P funds who are even catering to that segment. I mean, P industry is almost like a barbell, right? Where there are plenty of VCs family offices catering to the early stage. There are very large funds on the other side where they write 200 course plus checks and there are very few companies in that zone. So there's always competition there but this middle is sparse, right? So there are very few funds who would cater to that 10 to 20 million dollar investment and cater to those companies which are 100 to 300 pro range. They may not grow 100% year on year but their growth is in many ways less risky to underwrite as an investor. Shashank, I'll come to you. You know, while we've talked about funding slow down but you know, there is no funding slow down in your territory. You've been making aggressive investments in the past one year also. And as you mentioned, it's also an equity hires as well. So, you know, where do you think I mean, the slow down actually came from and what is the real slow down per se that is not being definitely not being able to compare to it you know, in terms of what that slow down is and what exactly is not getting funded during these times. During these times. So, you know, from our vantage point we work at the bottom of the pyramid where we are a severe registered fund. We make small ticket size investment 160K USD. We've done a total 140 to investments and 62 just this year. Now, from our vantage point our mission is to invest in 100 companies a year. We only go chase that number is because you fundamentally believe that there's a ability for these companies to go on to raise CDJ, CDB. So, from my perspective, I don't think so there's any slow down in terms of CDJ and CDB. At least 10 to 15% of our portfolio companies have gone to a CDJ, they've raised five to 45 bucks. So that's an indication of that this ecosystem is playing and I completely agree with that this thought that I think from there on companies are required to scale and optimize sustainability and profitability all those parameters. I don't fundamentally believe there's any fundamental there. It's a sign of maturity of the ecosystem. You look at 30, 40 years ago, valley and how they progress. I think from that perspective, 2023 is a very interesting year. I mean, India perspective, we've got immense capital, enough dry powder at various stages which has never happened for the last 10 years. Funds like us never existed. We started because we felt there's an opportunity to build out companies. P funds have been there since 2009 and there is enough and more happening there. Right Shanti? As Nitin pointed out, there's enough in the SME segment which is a huge untapped opportunity if they develop a mindset to kind of not build lifestyle business and continuously grow in terms of how the larger funds expect them to grow in terms of return. So we continue on the mission of investing in 100 companies a year. I don't fundamentally believe there's any dearth of capital and opportunities which scale up to series and series B. I'm not a series B and beyond investor. I don't know how the metrics will pan out, but yes, historically speaking, companies are receiving funds. If you look at 10 years ago, if you just do the rough math, the number of IPOs, the number of unicorns, yes, we've got all the stories about this IP not working and all that stuff, right? But 10 year comparison, we're still on a progressive path. So I think on a quarterly basis or a half-yearly basis, if you figure out if there's a downturn, you'll find here and there. But overall, I think you're on your, it's an interesting story and it's a sign of maturity of the ecosystem from both sides, bottom of the pyramid and top of the pyramid. That's my two sides. So I see that Ruchira has also joined us online. Yeah? Hi, Ruchira. It's good to have you with us virtually today at the panel. Can you hear me? Hi, Shanti. Thank you. Nice to be here. I don't see the rest of the panelists, but I'm not sure. Can you confirm if you can see me? And you're okay? Yes, we can see you and we can hear you also quite well. And are you able to hear me? This is Ritu Mara, Ruchira. Sorry, Shanti. I wasn't able to hear you. I think she's, I think it's happening. So in the meantime, I'm going to jump on to you before I go to Ruchira. You know, debt equity is certainly something that we've been talking about, which is equity funding for startups has been there, but also we've seen the debt funding or debt against equity is something that has also been growing for startups in the last few years, particularly in some rounds where they're not able to raise startup equity. They are able to sort of raise their equity and be going with their operations. So what kind of resilience today do you look for in entrepreneurs? Because obviously you don't want to lose your money. So what kind of resilience and what kind of practices do you look for in such businesses or in such startups before you're able to give them that kind of capital? Yeah, it's been a very important question. And underwriting is one thing that we have been, you know, really changing ourselves over the last seven years, you know, what we used to do in the first 2016 era is very different from 2023 era. As lenders, as you rightly mentioned, losing capital is not really an option because our returns are really skewed, right? But many investors have started realizing that debt is a very interesting tool to have in a cap table because in current environment it brings in a lot of discipline, which is very critical in, as we speak about process systems, et cetera. This was nobody talking about it two years ago because everybody's talking about only growth. But as lenders for us is always about being building a sustainable business and sustainability comes through multiple practices, right? We can make a lot of these points have been already spoken today. And one has to judge whether whatever the founder is saying is actually doing it on paper, right? So a lot of times founders will come, they gave a great story. It's all about execution, which sort of comes down to numbers and the kind of companies we work with are beyond series, you know, series a plus kind of businesses. So they have been in existence for over three to five years. And once you've gone through cycles, you have built multiple ways of doing businesses. Now, there are certain kinds of business that do not work for us, right? For example, if you're gross profit negative, that means you're not doing a business, which is actually a business, right? It's more of a valuation game. It's maybe you're creating a market, very different kind of ecosystem. Debt really is not really a use case. But if you're a D2C brand, right? You want to invest in inventory. You want to invest in Kpex. You want to sort of build your own supply chain. You want to give working capital credit. All those things are very debt use cases, right? Because certain capital makes a lot of sense to use debt. And if your business is built on certain good business model scenarios, which is around profitability, and at the same time growth, right? Because growth cannot be given away, right? Today, everybody's focused on profitability was people have forgotten about growth. For such companies will not be able to raise capital. Because finally the risk capital is coming for business who have to grow. So we are in a very interesting juncture today, where we have to be able to really find those niche businesses who are category leaders. And at the same time can grow profitably. Now it's very easier said than done, right? We can talk about, you know, you have to have corporate governance, you have process system, but to actually go out and implement day to day basis and scale at the same time in market scenarios where you know that funding is not coming easily. You know, you might be a great business today, even to raise a million dollars for somebody who raised $25 million is not the same, right? Because valuations have changed. The investors who are ready to invest with you are also gone away. So as a lender, when you're looking at it, you have to be aware of all the situations and you have to see what is the downside protection, right? Do you see a lot of value in the business? Is this something that two years down the line are customers ready to pay for this, right? Is it something which has been coming because of credit? Is it becoming because of discounts? Or there's a need for it? So a lot of the scenarios we start looking at it, spend a lot of time on data, spend a lot of time on actual, the quality of MIS that they have spent, the kind of investors that they have. Because today investors play a huge role. Like we talk a lot about the founders, but investors play a lot of huge role because they are present across so many portfolio companies. They learned a lot also, like because they have seen some companies go for IPO, they have seen some of their companies not do well. So all those learnings and mistakes come to the founders. Now, whether you take advantage or not, whether the board is active or not, a lot of those things you start realizing once you start spending more time on due diligence, et cetera. And we believe that you are very active passive lenders, active in terms of understanding passive because you're obviously not on the board. By the same time, we like to keep spending time with the portfolio companies, share with them what's happening, right? Because people like us have access to across 80 plus portfolio company, right? We see a lot of businesses out there. We like to share good practices. We like to share what's happening. You should pick up those things, right? And some companies literally have become a bit of positive because it stopped spending and marketing 18 months ago, right? Which was somebody who was burning a lot of capital, suddenly realized, okay, you can't keep burning the way you are. So people take feedback, it's up to the founders, right? It's up to us to obviously share that, but we are obviously passive in that way. And that it's a sort of a front and back that goes between your discussions and you sort of try to see that the business is not going on or a different track altogether.