Diversification a key aspect of investing in private markets: Adrija Agarwal

Adrija Agarwal is a Partner at Sattva Ventures and represents the second generation of the Sattva Group. In the past five years, Adrija played a pivotal role in creating and managing its family office Sattva Ventures and actively engages in both public and private markets.

Ms Agarwal’s leadership has driven the group to make discerning investments, including the acquisition of Simpliwork and also helms the group’s hospitality sector.

She holds a bachelor’s in bioengineering from Cornell University, a master’s in management from London Business School, and an MBA from Kellogg Business School.

At LetsIgnite 2023, India’s largest conclave for startup investors, Ms Agarwal was part of a panel discussion on the young titans of family offices in India. Here’s an excerpt from a panel discussion.

This session today really is to try and understand how and why they are allocating capital to private markets. Adrija, your approach is, if I may and you can please add to this, to actually diversify and get into newer asset classes that you were not traditionally deploying investments into, right?

We’ve not had a liquidity event but we look at our family office as a business in general. There’s an opportunity cost to capital that comes that has to be deployed in a certain way to get an X amount of return. That alpha that is generated between the money that comes out from the operating business – which is what is invested – is what the business, or the profit and loss, should look like.

So in that aspect, we don’t look at asset classes that other family offices do. In terms of debt, we wouldn’t look at it because for us, that return is not enough to justify. But as you rightly mentioned, diversification has been a big aspect.

I think Indian entrepreneurial spirit and the kind of people that you get to meet in the process of investing, whether it’s through funds or directly into startups, has been phenomenal. Everyday is a good learning journey.

Over the last couple of years, we formalised a strategy. While the majority of it would be in the public market, about 25 to 30 percent would go into funds and directly into investments as we learn more about each sector.
That’s how we look at diversifying from a family office perspective into all asset classes, apart from real estate because the core business is into real estate.
What is the role that you believe that family offices or large capital allocators can play in this market for yourself from an investment point of view but also from the point of view of deepening the ecosystem.

Family offices offer a different perspective to the cap table. While VCs offer how to allocate the money and network access of one kind, I think family offices offer a network access or perspective of a different kind.

For example, many of the family offices have taken companies public and know how to run profit and loss more efficiently, scale up the business because they come from that entrepreneurial DNA. I think entrepreneurs have started realising that.

It is also always beneficial to offer something beyond capital. Capital is available in the market. If someone comes to me, my first question is, ‘how can I help them?’

With 35 companies that we have, there’s a synergy between the two and we can connect them. That is what will help the company grow. Of course, our investment will grow as a by-product of that but the scale the business will show, they may not have access to it.

I know you have teams now doing all of this.
I don’t think it’s possible without them and I’ve been fortunate to have a great team to help with this. They see synergy that even I wouldn’t see somestimes.

What would you like to see GPs in India do differently?
Let’s call the laggards the laggards and let’s call the winners winners and let’s treat them equally. If you’re raising capital for the winner, don’t go with the loser to the family office or to the LP. Let’s go with the winner as well so that it’s a level playing field for everybody.