The gains aren’t all paper gains either. In Zomato’s previous funding round, Info Edge made Rs 330 crore ($45 million) by selling a 6% stake. It’s done something similar with Policybazaar too, progressively cashing out some of its gains by selling shares to newer investors, while seeing the value of unsold shares continue to balloon.

“The thinking [behind these investments] was very simple. We had cash on our books and we felt that there are many opportunities out there; many good entrepreneurs trying to do stuff, a lot of which can’t be done internally. Our hands are full with four business units. We thought we can create value for our shareholders by investing in quality companies”, says Bikhchandani.

Success In The Investment

But to (mis)quote Benjamin Parker, with great investment successes come great valuation expectations. Many stock brokerages now value Info Edge as a VC firm, by valuing its standalone business and investments separately.

Motilal Oswal, for example, values Zomato’s contribution to Info Edge’s stock value at Rs 193 ($2.64) per share and Policybazaar’s at Rs 85 ($1.16). These two constitute the largest portion in its sum of the parts valuation of the company. Their contribution to Info Edge’s current valuation is estimated to be Rs 2,350 crore ($320 million) and Rs 1,040 crore ($142 million) respectively. That’s higher than the contribution from Info Edge’s own #2 and #3 group companies—99 Acres and Jeevansathi. (The former’s contribution to Info Edge’s stock is valued at Rs 131 per share ($1.79), while the latter’s contribution is valued at just Rs 25 ($0.34)).

Put differently, Info Edge’s startup investments are now the (unicorn) tails wagging the dog.

Even so, Bikhchandani isn’t really looking to create an Indian equivalent of GV. GV—formerly Google Ventures—is the venture capital arm of search giant Google’s parent company, Alphabet. It invests in early-stage tech businesses. Bikhchandani prefers to keep things in-house. This has led to Info Edge becoming only the second Indian tech company to make investment bets through an existing company (Travel company MakeMyTrip being the other).

Since it doesn’t invest through a VC fund, Info Edge is also free of a major restriction that hampers typical VCs—exit timelines. “VCs generally have timelines in place. They have to return money to LPs (Limited Partners) after 8-10 years. We have got permanent capital and there are no exit timelines. In Policybazaar, we first invested in 2008. 10 years later, we are still investing,” says a member from Info Edge’s investment team.

But not being a typical VC fund also has its drawbacks, and these drawbacks are becoming increasingly evident.

Changing times

To find its next Zomato or Policybazaar, Info Edge has a team of five people whose sole focus is scouting for potential businesses to invest in. The team is headed by founder Sanjeev Bikhchandani himself, with additional support provided by Info Edge’s legal and finance teams. Each month, the team meets with 150-200 startups, according to Info Edge.

150-200 startup meetings in a month is a significant number for most VC firms, much less a listed internet business that does this as a sort of side gig. The number also doesn’t square with the actual investments that Info Edge finally makes—roughly four a year. Thus, to a casual observer, either Info Edge seems to be meeting too many startups or making too few investments.

While this setup has served Info Edge well thus far, it doesn’t stack up to most VC funds. VC funds typically have an investment team of 10-15 people who help with sourcing and making deals. The quality of this team determines the quality of investments the fund gets. With more hands on deck, it does seem that deal flow at any decent VC fund would be greater than Info Edge, and the firm would face severe competition, especially on important deals.

And then there’s the issue with Info Edge’s investment approach. The company is only interested in early-stage investment. “Our first cheques are usually in the range of $1-3 million. The strategy is to get into companies early with a small amount of money, and as the company delivers, keep doubling down”, says a member of Info Edge’s investment team.

Apart from its unicorns, the classifieds company has invested in a host of small start-ups ranging from real estate, education, B2B marketplace to agri-tech. In each of these companies, Info Edge, as an early investor, has a significant minority stake.