It's Time You Discovered the Multibagger Secret of VCs

Zomato was a 1,000-bagger for its early investor, InfoEdge.

It was the classic case of a venture capital (VC) like investment by a listed company.

But are there more InfoEdge like companies? Can there be more Zomato-like fortunes in store over the coming years?

And can individual investors get on board such profit vehicles and discover the secret to VC like returns?

My colleague Richa and I, set out to find the answers to these questions a few years back. This was well before startup listings became a hot topic in Indian markets.

Richa and I poured over the balance sheets of several companies that were showing a unique trend.

Most listed companies are linear growth companies. Very few of them have the potential to grow fast like startups.

But something has changed over the last few years.

Some forward-thinking listed companies are either investing in disruptive technologies or are acquiring fast-growing startups. They're incubating startups or riding startups at early stages just as venture capitalists do.

This picture will give you a rough idea of what's happening beneath the surface...

This is a simplified version of what actually occurs. In reality, this maze of interconnections is much wider and deeper.

However, once you decode this maze, a whole new world opens up to you.

You start seeing opportunities that are invisible to others. You start spotting companies that are turning from linear to exponential growth companies.

One of the companies we were studying surprised us. It had been backing many high potential startups for a few years. These startups are in businesses across sectors.

And many could do to the fortunes of the listed stock what Zomato did for InfoEdge.

VC Like Exposure to Startups

Business Segment of the Startup	Stake
Business Accounting Software	27%
Legal Tech Platform	11%
Transport Management	25%
Invoice Discounting and Factoring	8%
Enterprise Resource Planning Software	100%
Distribution and Salesforce Management	16%
Shipping Operations Automation	26%
Autonomous Procurement Platform	26%
Inventory and Warehouse Management	26%
E-commerce business for Industrial and Business Supplies	26%
Freight and fleet management software	17%

Source: Equitymaster

But can we blindly go ahead and invest in a listed stock that takes stakes in startups?

Absolutely not!

Rather, Richa and I spent months to create a proprietary framework called V.A.S.T to identify only the best stocks for disruptive tech investing.

Despite their allure, many such startups can be extremely dangerous to your portfolio...

...Unless you're discerning about cash flows the addressable market... and a lot more.

Our V.A.S.T framework simplifies this whole process for us.

What is this framework all about? And how do we find the best disruptive tech stocks?

Well, last evening Richa and I were live at a very special online event: Equitymaster Venture. We discussed VC-like investing in-depth. We also talked about the top 20 stocks to own for VC-like gains.

The event was a big success. In case you missed it you can watch the replay here.

Warm regards,


Tanushree Banerjee
Editor, StockSelect
Equitymaster Agora Research Private Limited (Research Analyst)

PS: Watch the replay of the Equitymaster Venture here.