In addition to his role as India Managing Partner of Celesta Capital, Sudhir Rao is also an Independent Director on several Boards. Sudhir has been a leading industry pioneer in the capital markets in India for over 40 years. As a founding director of Karvy Investor Services Ltd. and Karvy Stockbroking Ltd., he was involved in providing Investor Services, Merchant Banking, and Retail Financial services catering to a footprint of over 20 million investors.
What do you think are the most critical things necessary to build a successful company at scale?
A role we take very seriously at Celesta is working closely with our portfolio companies to aid in their growth. With our collective history and experience, we’re able to analyze a company and the broader market to isolate the many dimensions which define scale-grade companies, and also determine the levers which need to be pulled in order for them to reach their potential. Time horizons, talent, strategy, finance, market dynamics – all of these factors are different for each company. Once we have that understanding, we can dig in and help particular founders.
Take a company like Stellapps. They had the audacious idea to deploy IoT to the cloud in India – two big new words at that time especially in rural India and in the agriculture space – to transform the dairy supply chain. Rural farmers in India lacked connectivity and even power, so the requisite dimension to scale for this company was very unique: setting up a full-scale connectivity network. Today, Stellapps is measuring the quality and price of over 10% of India’s milk, over 12 million liters of milk each day in 40,000 points of presence. That is scale which is only achievable if you have a very clear and focused plan.
What is one piece of advice for founders?
Focus on building talent above all else. When we look at commonalities across companies in our sector of investment, the highest prerequisite for scale is attracting diverse cross-functional talent. Think about matching talent to the stage of your business as well. What’s right for zero to $1 million? $1 million to $10 million? Your talent needs are different at every stage.
For many years, I have been driven by the understanding that capital bridges effort, outputs and outcomes. Technology is a significant contributor to productivity and progress—The prudent alchemy of technology, talent and capital can drive a sustainable, meaningful and exceptional economic outcome.
Please share a bit about your training and professional background.
I studied accounting, getting my CPA equivalent in India, as well as my CMA (Chartered Management Accounting). With management accounting, I learned how to look beyond the numbers alone—learning commercially prudent strategies and directing activity-based thinking to help build and manage a successful business. That was foundational learning for me which has paid dividends throughout my career.
On the personal side, I was very influenced by the people in my life. My mother for frugal thinking and sharing; my wife from her defense services background for rigor and discipline in execution and transfusing her passion for the arts and literature; and my father, who came from a very poor background and risked everything to make a change. At 14, he embraced risk and set out from his village in rural India to build a future for him and his family, migrating to a city for a better life. He was a real risk-taker and passed the entrepreneurial instinct on to me. He’d say, “If you see the status quo that needs change, you have to step forward and make the change happen.”
At 25, I began my journey as an entrepreneur, looking for sectors primed to embrace change. I co-founded an electronics company with a partner. We learned the ins and outs of the tech startup world, and lessons about how best to deploy our individual time and energy on the right focus areas. This is where I learned first-hand that businesses require a diverse set of multi-disciplinary talent in order to succeed.
Entering the 2000s, I shifted my focus from building my own businesses to helping others build their business as an advisor and venture investor. Ever since I’ve backed companies creating technology that drives the economy forward.
Is there an achievement you’re most proud of to date?
Yes, I would say my contributions to building and institutionalizing the capital markets in India. In ‘89, India was beginning to change, liberalizing with policies shifting away from the ‘license Raj’. I saw the opportunity opening up in India for the growth of capital markets.
I joined a partnership and for 10 years, we built India’s largest public capital markets intermediary, helping to build the ecosystem and infrastructure as the market institutionalized. We were servicing about 20 million shareholder accounts in a tech and digital-first approach. We saw the onset of regulation, embracing it and sitting on the leading edge of regulation, standards, and compliance. It was a very interesting and exciting time which transformed India’s economy.
We look for futurists, disruptors who are thinking about the applications that are going to fuel the businesses of tomorrow.
What do you enjoy most about your role as Celesta’s India Managing Partner?
My most important role at Celesta is building the firm – the ecosystem of partners, investors, and founders that bring our vision to life. All of us on the team have created successful businesses in the past, in our own different ways. And the joy of working together is using this diverse experience, continuously calibrating and improving our ability to choose and nurture our investments and providing risk-adjusted returns to our investors.
What notable trends are you seeing in the Indian VC investment landscape right now?
The level and speed of digital adoption in India is something to pay attention to. As the digital infrastructure within India continues to scale in orders of magnitude, its 658 million users are actively engaged in a digital way of life. Each of these areas are ready for innovation in the form of consumer-facing digitization – in banking, healthcare, space tech, etc. They are all spiraling up.
On the talent side, India now has 5 million workers in tech-related sectors. The talent pool is massive, and many are becoming entrepreneurial. These are self-contained teams of cross-sector talent already working together for global companies. When they choose to be entrepreneurs, they’re coming out as global players and already able to think about running businesses.
These factors set India at a tipping point of core enabling criteria for growth. With the mix and scale of the talent pool and the level of advancement of enabling technologies and digital infrastructure, the India market is primed for a new generation of technology-enabled companies that will grow the economy.