A conversation with Basis' Hena Mehta
Hi everyone, hope the you all got some good rest and relaxation over the weekend. In the newsletter last week Anmol talked about Zomato's upcoming listing, and we got to see what a big event that turned out to be. The company, which valued itself at 23x revenue for its IPO, closed its first full day of trading ~65% up (and at a valuation of close to $14B). Impressive stuff.
On to today's newsletter. This week our main story is conversation with Hena Mehta, co-founder of Basis, a financial platform designed to simplify finances for the modern Indian woman. Basis offers women guided recommendations for financial products, tailor-made content, resources to help set financial goals, and a community of women who are navigating similar financial decisions. Hena was a senior at Wharton, and I was excited to speak with her about her journey starting up.
A conversation with Hena Mehta
I'd love to start out by asking you to share a bit more about yourself and your background before Basis
I grew up in Bangalore and have spent all of my career in fintech. I am a CS engineer from UPenn and started my career on Wall Street at Goldman bang in the middle of the 2008 - 2009 crisis. I was building products for equity traders and then moved into a cross-functional PM role at the company. I spent half a decade there at which point I decided that India was where I wanted to be long-term. The start-up ecosystem was very intriguing from what I could follow from being in New York. So I took a leap of faith, sold all my stuff, and moved back to Bangalore. I started working with a fintech startup called Ezetap, which is is the payments space. It was a 30-person team back in 2014. I was the first product hire of the company and did a variety of things while I was there - payments, point-of-sale products, etc. After two years at the company, I thought it was a good time to get an MBA and moved back to the US — this time for Wharton. While I was there I spent 8 - 9 months in the Bay Area through Wharton's San Francisco program, and worked with Square. I worked as a PM on the Square Capital team. My long-term goal of building in India hadn't changed and so I moved back again after the MBA with a hypothesis in mind, which I ended up validating and which is now Basis.
Can you tell us a bit more about the idea for Basis and where that came from?
The idea was triggered off from some of my own pain points. When I was applying to Business School I was very diligent about thinking through all aspects of my application from the essays to GMAT sores, etc. But I hadn't given much thought to the financial aspect of it and how I would fund the education. That to me was a wake-up call. It was my first #adulting moment. I was saving in my early 20s but there were no major responsibilities. And even as someone who was reasonably well exposed it struck me that I hadn't given serious thought to how I should plan my money, invest it and set my financial goals. That was a problem and something that was on my mind. When I moved back I validated that I wasn't alone in being in such a situation. Many women in their 20s and 30s, whether single, married, salaried or free-lance, whatever their situation maybe were in the same boat. 9 out of 10 women I spoke to shared the same challenges. I felt that something was needed to fix this. Arguably, women need financial services more than men, just because of how our lives play out. We live longer, we have higher healthcare costs, tend to take more career breaks, have more health risks, etc. which shape this. So looking at both the macro and micro challenges regarding the financial trajectory of women was what sowed the seeds for Basis. I hadn't planned to come back and start a company. Entrepreneurship was something that was on the longer-term roadmap. But things just sort of happened. I went deep into this problem and I had a couple of angel investors I had connected with during my time at Wharton who were willing to back the idea. So it was a case of if not now, then when, and really, why not?
Financial planning in India on the whole, I would argue, is a problem area. What made you decide to focus on women as opposed to the broader problem, especially from an entrepreneurial point of view?
If you look at the current set of platforms and newer age consumer fintech apps, what we see is that 5 - 15% of their user base is women. So they tend to default to men. While financial literacy, penetration of financial services and even stock market participation is low in India there's a lot that's happening in that space. Just in the last couple of years we've seen a lot of action in this space. But despite all this, the participation of women is low. Overall fintech is also moving towards more verticalized products globally. We saw women as the most underserved segment in finserv more generally, and a big opportunity there. Targeting women is seen more as a marketing problem by existing players, whereas we think they are a segment whose needs must be addressed more deeply.
As you started the entrepreneurial journey, what made you look for a co-founder rather than remain a solo founder?
I was a solo founder for the first several months. Entrepreneurship is a very lonely journey, and I knew if I was to go all-in I needed a co-founder on the journey. I think there is tremendous value-add the right co-founder can bring. But I didn't want to rush into anything. I had a very specific profile in mind on what skills I felt could really complement my skills. I bring a lot of fintech product experience to the table, and I wanted someone who had experience in financial advisory and wealth planning. I took my time and didn't want to jump into anything, because it is like a marriage. My co-founder, Dipika, has also been my friend since middle school. We chatted about this and she fit the bill exactly. She has about 12 years of experience as a financial planner and educator. We had a lot of extremely transparent chats so we could keep our friendship intact but also work together in a professional manner. Knock on wood, it's been great so far and I couldn't imagine this journey without her.
As you started building Basis how did you approach go-to-market and find your first customers?
In many ways, we are creating a category-defining product. In an Indian context women-focused finserv didn't really exist. In this market, knowledge and trust gaps are typically what hold women back. They either feel they don't know enough or that they don't trust their bank RM - or any informal advisors in their lives. We took a community and knowledge driven approach to start with, rather than diving directly into financial products. We knew we had to build a trust layer first, so women could get comfortable, ask questions, get social proof. Very early on we experimented with the community where we didn't restrict who could join by gender. Not surprisingly, we saw that while men and women both joined the community, men just took over. Women tend to withdraw from discussing topics like money and finances in the presence of men. So we changed that to a closed women-only space, and saw that really take off. Both Dipika and I had run the Lean In Bangalore chapter, and had started this in 2015. It's a community that is still active, with almost 3K professional women in Bangalore. The group became our alpha and beta testers. These were exactly the women in our target audience, and allowed us to gather feedback and insights. We then started partnering with corporates. Dipika had led corporate partnerships in her previous role, and built out that channel for Basis.
What was your fundraising journey like? You can't ignore the elephant in the room around the challenges this poses for female founders...
Fundraising by design is a hard process. It's more of an art than science. Obviously, it helps to have networks. Being from a school like Wharton helps and opens up doors that wouldn't otherwise be easily accessible. But when it comes to investor interest and being able to relate what you are building, if 95%+ of the investors are male, quite often this is a market whose pain points and challenges they can't really relate to. So these were some of the hurdles we had to cross. There were comments in the beginning about why do women even need this, aren't they fine if their husbands and fathers take care of this? All of our findings contradicted this — we kept hearing the message and seeing data that women wanted more autonomy over their finances. At the end of the day if someone can't relate to you or the product you are building then it's a challenge. But the point is to find the believers, not necessarily convincing the non-believers. The nice thing is that in the ecosystem there are now more women-led start-ups as well as start-ups that cater to the women segment. So now the conversation is less about whether this is needed - but more around how to cater to an opportunity we see in the market. Hopefully the more number of women decision makers we see on the investing side, this will be less of an issue. And, of course, after the early stage, your traction and numbers have to speak for themselves.
We keep hearing how difficult it is for founders to hire their initial team. What was that like for you?
I keep saying that hiring is more difficult than fundraising. It does help to have a network, and I was lucky that I had experience in the start-up ecosystem in Bangalore and was able to use that. In the early stage, the challenge is also one of resources. You have limited cash in the bank, and frankly the idea of ESOPs etc. is still somewhat theoretical unlike say in the Valley. That too is changing now with the exits we are seeing. But, hiring continues to be a challenge, especially in Bangalore. It's more of an art, and I don't think there's a set formula to finding the right people. There's also an element of luck involved in getting the right person on board. Our team is now 15 people, and we've been able to retain some really awesome talent. It has helped to be a mission and purpose-driven company. Our team is majority women, and in many ways we are our own customers. But for the guys on our team as well, they've seen a mother, friend or sister struggle through these issues and believe in the goal of the company. That intrinsic motivation is really important, especially during the down times. We've also learnt that hiring is a continuous process and we are always on the lookout for great talent. For instance, we had been in conversations with our head of growth, who comes from Instamojo, for several months before he decided to take the plunge and get on board with us. Those kinds of conversations and outreach are very critical.
Could you speak a bit more about the direction in which you see Basis growing?
The user journey really starts with community and education. We wanted to build a trust-layer on top of the financial stack first, and that is what we've been focused on for the last year or so. We just crossed a 100K app installs, and have focused heavily on engagement and retention. So the aim is to have women keep coming back to the platform every time they have questions about financial products. We also have experts who have organically joined the platform, like accountants, financial advisors, insurance experts etc. Of course, we want you to get to the point of facilitating transactions whether its investing, buying insurance, getting loans, etc. So across financial services, we are now focused on building our the transaction layer, as we continue to engage our user base. We are starting with health and life insurance, where we are building out a recommendation engine that takes into account very women-specific issues. The aim is to ask questions and pair women with plans that are tailored to their needs. So the user journey becomes learn, engage, transact across different life stages, and different types of financial products.
Overall, we are bullish. Despite the set-back during Covid to female labour force participation in India, longer term the tends do indicate that we will see more dual income households, women getting more access to inheritance, more women starting small businesses, etc. We are building a business that will be relevant over the next ten years and beyond.
News this week
Even as Zomato went public, in a reminder that it plays in a tough market, its close rival Swiggy close a $1.25B Series J round led by Softbank and Prosus. This is Softbank's first foray into the food delivery space in India. Sumar Juneja, who heads Softbank in India, had previously backed Swiggy during his time at Norwest, and is clearly bullish about the company.
More IPOs are coming. The latest addition to the list is Policybazaar, which is looking to raise up to $870M through its IPO. The online insurance aggregator is said to be seeking a valuation of as much as $5 billion, up from $2.4 billion at the last funding round.
Khosla Ventures has made on of its most significant invests in India, leading a $75M Series C funding round for healthtech start-up HealthifyMe along LeapFrog Ventures. Khosla Ventures' investments in the country have been pretty focused on the healthcare sector so far.
There's so much scope for productivity gains and disruption when it comes to the logistics sector in India. So, it was exciting to see BlackBuck, the surface logistics player, raise a $67M Series E round led by Tribe Capital, IFC and others, and enter the unicorn club. BlackBuck provides B2B logistics solutions for long-haul trucking and intercity logistics services to customers ranging from large corporations to SMBs across minerals, fast-moving consumer goods and other categories.
Byju's continues its aggressive acquisition streak - it's already made some six acquisition's just this year. The company has acquired edtech players Toppr and Great Learning. Great Learning plays in the upskilling and reskilling space and provides diploma and certificate courses in areas such as data science, digital marketing, etc. Toppr on the other hand provides a learning app for kindergarten to 12 (K-12) students, allowing them to take live classes and tests and view recorded learning content.
Interestingly, even as Indian edtech seems like a juggernaut that can't be stopped, across the border in China it looks like the CCP has decided that too much private capital in education is not a good thing. It's been interesting to read about it. I found this thread — and the links therein — by Lillian Li particularly insightful.
Talking about regulations, the ever changing, ever confusing e-commerce regulations in India are in the news again. The Consumer Protection (E-commerce) Rules, 2020, which were issued just last year, are being amended again. As many have argued, amendments to e-commerce rules in India rarely have consumer interests at heart. Instead they usually champion the interests of organizations like the Confederation of All India Traders (CAIT), the Swadeshi Jagran Manch and the like. For example, the new rules propose that if e-commerce platforms sell imported goods, they must display the name of the importer, specify the country of origin, and suggest domestic alternatives. There's other stuff that's not good - like a ban on flash sales, marketplaces being made liable for sellers on their platforms, etc. Medianama had a good run-down here.
Finally, it's still very early days but the RBI has indicated that it may conduct pilot projects for retail and wholesale central bank digital currencies in the near future. The RBI is one of India's better regulatory bodies, and it is usually thoughtful in its approach. Details of Deputy Governor T Rabi Sankar's comments are here.