Founder Interview: InfraBuild Venture Partners
Not many startups go into the heavy end of the industrial landscape. These sectors are deemed only for the big players, but then again – if you are sure of your strengths, any obstacle can be tamed. InfraBuild Venture Partners is an upcoming consulting firm that operates in oil & gas, defence and healthcare. Akash Kapoor (Co-founder) explains his startup journey in more detail.
The obvious question first – your chosen industries are all ‘heavy’ in every sense: from existing players, investment to gestation period of projects. How do the pros outweigh the cons?
We are a consulting firm and our partner’s expertise lie in these sectors. The 3 partners have more than 35 years of cumulative experience in oil & gas, healthcare, defence and international business. We at IVP like to position our selves as enablers / facilitators. Wherein we consult for several Indian and global companies, bringing them opportunities, facilitate partnerships, Joint ventures and Investments. A conscious decision, taken by the management has been for IVP to invest in very selective projects. So while we have successfully closed out various transactions in healthcare, energy and defence as enablers – we are yet to invest in a project as a company. This mainly is due to the fact that we wanted to establish a name before fronting our first project.
We have a very capable team of sector analysts that evaluate each project, keeping the limitations of barriers of entry, long gestation periods and investments in mind we work on a detailed project plan with clearly demarcated milestone based goals. And only when the pros outweigh the cons do we suggest a project to one of our partners. This exercise also helps us in understanding the market and sectoral activity through extensive research and market based studies. So through sector expertise, market research and in depth planning with clearly demarcated goals we undertake projects wherein the pros outweigh the cons.
Normally entrepreneurs start in a field where they have experience and/or where they see a gap. Assuming that your team had experience in the sectors, what were the gaps that you saw in services?
Energy: If you look at the energy scenario of the past two-decade or so, Asia apart from being a major consumer of energy has also turning into an owner of energy assets. Including hydrocarbon, power and infra assets. We see a major opportunity for Indian and foreign companies to provide ancillary services to the energy majors. For example, Iraq at the moment is operating at 40% capacity of its crude oil production as compared to its pre-war production. Now, as energy majors are developing assets for production, there is huge demand from OEMs and EPC providers for crude pipelines, tank farms etc. In India, we see a big opportunity in natural gas. Although the demand is there, high prices prevail due to lack of infrastructure for transportation of LNG. We see a lot happening in this area in the near future.
Healthcare: This sector, although now reaching the expansion stage, is still fragmented and unconsolidated. With access to smart capital and private equity money coming into this space, we see our selves playing a major role in deal sourcing, due diligence right up until deal closure. We also see major healthcare business being expanded to Tier II, Tier III and rural areas. By some conservative estimates rural India will have a potential requirement of 1.75 million new beds by 2025. Additionally, in terms of medical tourism coming into India and medical export services we see a gap being bridged between a relatively unorganized sector at the moment to a few player consolidating and taking on territorial exclusivity and consolidating.
Defence: The Indian defence and homeland security market is very lucrative due to the following factors:-
(a) India largely has an import driven procurement with almost 70% of the equipment being imported.
(b) There has been a recent shift Defence Procurement Policy towards buy Indian which will lead the foreign OEMs to either setup joint ventures with Indian partners or do a Transfer of Technology (ToT) to India.
(c) The offset requirement of 30% for defence procurement helps in leveraging capital acquisitions to develop the Indian defence manufacturing industry.
Especially since, the Defence Procurement Policy gives preference to buy Indian equipment, there is a big role for informed consultants to play in guiding foreign OEMs through the policies and regulations in assisting collaborations, partnerships and Joint ventures.
Strategically, what was the thought process behind starting with a number of sectors, why not focus on a couple and then build forward?
IVP has 3 partners. Our managing partner has over 35 years of international business experience in various sectors. Since, defence is a specialized field the other partner has a degree in defence studies and considerable exposure as a consultant to various international defence. I have worked with energy trading desks at several banks in New York and worked for several oil & gas companies. We understand these sectors. Our individual interests and expertise made us chose the sectors IVP operates in. Strategically it made sense to leverage upon our expertise, network and more importantly interests – hence we chose to concentrate on 4 sectors – Namely, Oil & Gas, Healthcare, Infra and defence. Sourching & trading and financial services I feel are more to compliment the above 4 main sector, wherein there may be a requirement for additional capital or a project may require sourcing a particular product or service.
Your business must also be heavily influenced by regulations, policy changes and certain other well known business problems in India – how are you handling the uncertainties?
This is a very valid question especially for the sectors we operate in. We have a 2-fold approach to this.
Since our team has vast experience in these sectors therefore the regulations with regards to the sector have been imbibed in them during their exposure to the sector and we are able to foresee and address uncertainties and pitfalls with regards to businesses that we operate in However, we are mindful of the fact that we operate in a very dynamic business environment where regulations, policy and business trends are constantly undergoing a change. Hence we have a team of analysts that map the sectors on a regular basis. We regularly publish sector reports for ourselves as well as our clients. This ensures we are a step ahead of the game and can be well informed of the regulatory & policy changes and have a realistic view on our projects keeping in mind operational problems in India.
For everyone involved in B2B businesses, this is a critical question – How did your first client come by?
Although we had access to various companies through our cumulative network and experience. Once you walk into a door as a consultant, clients are willing to pay top dollar for your services especially in today’s tight liquidity environment only when either:
a.) You bring to the table a well researched project with all the loose ends tied up. Which takes considerable amount of time and resources before you can present the opportunity to the client.
b.) Alleviate any major pain-point, opening up bottlenecks or alternative avenues for a company.
Clients come in slowly and purely based on your performance in the sector. So the initial foray was to make our presence felt by making enumerable, well-informed business pitches. It took us nearly a year to sign on our first client, which came through only once we were able to show value that added to the client’s bottom line.
I strongly feel, one reason for IVP being able to sign on blue chip Indian and international clients is attributed to the belief and confidence we have in our abilities.
What is your one tip for aspiring entrepreneurs?
Listen to your gut – it knows more than you think it does.
More details at http://ivpllp.com/