Investors Cautioned Against Overvalued New-Age Companies

Fortuna Capital Partner Criticizes New-Age Companies

Sanjay Bhattacharyya, Partner at Fortuna Capital, spoke at the Moneycontrol Global Wealth Summit about the current market enthusiasm for new-age technology and platform companies. According to Bhattacharyya, many of these companies lack sustainable business fundamentals and are instead built on hype.

New-age companies often present complex narratives around their business models and growth metrics, but fail to demonstrate a clear path to profitability. Bhattacharyya argues that investors have given these companies an excessive amount of time to prove their business models, with some being granted a 10-15 year runway.

He also pushed back against comparisons between Indian startups and global technology giants like Amazon, citing that such comparisons are misleading. Bhattacharyya noted that Amazon had a cash cow, which is not the case for many new-age companies.

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A culture of imitation exists in the startup ecosystem, where entrepreneurs attempt to replicate the success of global icons without having comparable capabilities. Bhattacharyya believes that this culture is driven by the desire to be a successful entrepreneur, but aspiration alone is not sufficient to build successful businesses or create investor wealth.

For sustainable investing, Bhattacharyya identifies three key factors: profitability, reasonable valuations, and credible management. He emphasizes that investors need to focus on these fundamentals rather than being swayed by narratives and hype.