Info Edge - Peter Thiel model

There is a reason I put “Peter Thiel” model in the title because that is crucial to understanding what this company is about. They are running this company as if it were a VC Fund. VC Funds make money when a company in their portfolio becomes large enough to get acquired by someone else or when they go public. But the brutal truth is that MOST FAIL! The break-even period could be as long as 7 years. When a successful portfolio company gets into exponential growth, that’s where the fund becomes extremely profitable. This is a non-linear relationship and follows the power law. VC returns don’t follow normal distribution - so asking what the current companies are worth is a useless question. That’s why I didn’t venture into what meritnation or happily unmarried are worth. Its a zero or one question. No one knows. I suggest you look up the J-Curve of a successful VC Fund. Out of 10, you could expect 1 or 2 top companies to contribute to 80-90% of the returns. A couple may breakeven or post marginal profits, rest will fail.

With all that said - the real questions one should be asking is - Is Info Edge a successful VC Fund? Do they have the chutzpah required to identify early-stage startups? Do they know when to cut losses in failed startups? Do they manage cash well? and so on.

Info Edge is well past the breakeven point as a VC Fund.

This could either be due to Ind-AS or because Zomato was part of their consolidated financials earlier but was moved to joint-ventures. They may have redone the FY16 financials in AR so that numbers were comparable. A lot of companies have done this for Ind-AS. I am not quite certain though.

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