'India is an important education market'

'It's the second-largest market for us after the US, and should be the largest market at some point.'

Deborah Quazzo, managing director of US-based tech investor GSV Ventures, explains to Aryaman Gupta/Business Standard in an interview in New Delhi on the firm's big-ticket investments in Physics Wallah, and why it has shied away from ploughing funds into the beleaguered edtech firm Byju's.

Do you continue to remain bullish on India?

Absolutely. Education sector is not a silver bullet. It is something that requires patience, (companies must be) focused on products and the customers.

It is a massive portion of the GDP. India has a rising population - which is in contrast to countries like the US, with an incredible cultural bias towards the importance of education, and upskilling is (seen as) a fundamental engine of social and economic mobility.

We don't have that in many developed countries.

We also have a founder mentality here that is fantastic.

The challenge for companies here has been customer acquisition cost, and the ability (of consumers) to pay.

How do you evaluate your investments in Physics Wallah?

We are believers in increasing access, lowering costs, and improving learning outcomes.

Alakh (Pandey) and Prateek (Maheshwari) have been pretty fearless in their experimentation.

They have been maniacally focused on the consumer, and never been led by sales.

Physics Wallah was able to develop a set of products that were disruptive - lower costs, higher quality, great learning outcomes -- delivered with a freemium component.

Physics Wallah powered through the pandemic, because what they were delivering was so disruptive to the traditional test prep market in terms of bringing in access to a new demographic.

Why didn't GSV invest in Byju's?

I'm not going to take credit for dodging the bullet. At the time, I am not sure we were fully geared up on the Indian investment scene.

We may have been at a point where it (Byju's) was beyond something we would have been interested in from a size standpoint, since it got big so fast.

But, since I served on the board of Aakash, I do personally have a small investment in Aakash through the Blackstone group.

Byju's also acquired Tynker, which was in our portfolio through a majority stock and some cash deal.

Global VCs like Accel and Peak XV are reassessing their strategies in India. Has it altered GSV's investment plans?

No. It's (India) too important an education market. It's the second-largest market for us after the US, and should be the largest market at some point.

I think what is going to make a huge difference is if we suddenly see some venture-backed companies in edtech go public.

Broadly, the dynamics here are so much better.

For companies in India that we have invested in, like Emeritus and Classplus, it may require some re-domiciling.

The market here is so interesting because of this opportunity, which doesn't exist in the US.

But companies have to get ready for it, showing solid but not hyper growth.

The next two to five years is pretty exciting because it could create liquidity.

Is there any thought behind launching an India focused fund?

We are still not finished with our third fund. I like the idea of having the US and India as points of concentration.

We now have a lot of US companies also wanting to come into India.

There is a lot of synergy between the two markets. The diasporas are very strong between the two countries.

But we haven't gotten there yet.

Feature Presentation: Aslam Hunani/Rediff.com