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A Wide Net – Alumni

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23 Jan 2024

A Wide Net

Former tennis star and investor Navroz Udwadia (MBA 2005) sees scoring opportunities in global markets

Re: Navroz Udwadia (MBA 2005); By: April White

Topics: Globalization-Globalized Markets and IndustriesFinance-Venture CapitalBusiness Ventures-Business Startups

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Photo by Jon Browning

Growing up in Mumbai, Navroz Udwadia (MBA 2005) spent most of his time on the tennis court, where he was an internationally ranked athlete. Today, as cofounder and partner of Alpha Wave, a global investment group with a multibillion dollar stake in India’s startup scene, Udwadia is competing on very different playing field—but many of the same rules apply. “The distinction between good, mediocre, very good, and then great investors is emotional discipline; the humility to learn from your mistakes and not repeat those mistakes but make new mistakes; and the intellectual curiosity to constantly seek out non-conforming evidence,” Udwadia says. “When you come from a competitive sporting background, some of these things a little bit more naturally.”

The fast-paced and competitive world of investing felt familiar to Udwadia when he decided to pursue a career in public and private investment after HBS. He spent five years at Eton Park Capital Management before setting out on his own. The company that is now Alpha Wave launched with $1.2 billion in 2012 as Falcon Edge. Udwadia and cofounder Rick Gerson, who came from Blue Ridge Capital, wanted to merge the philosophies of their previous firms—such as an eye for undervalued companies and asymmetry in the risk profile—with information and domain advantages in India, the United States, and Israel.

The firm enjoyed early success, growing its fund and its team and expanding geographically. “But we tried too many things at once,” Udwadia says. In 2015 and 2016, the firm shrank from a high of about $3 billion to a low of about $600 million. “We were probably within one redemption of shutting down,” Udwadia says. That “near-death experience” refocused Udwadia on the tenets he had learned on the court: “In tennis as in life, 99 percent of your learning comes from your losses.”

In the mid 2010s, Falcon Edge shifted its focus from public to private investing (the company rebranded as Alpha Wave in 2019 to reflect this change) and returned to its investment thesis, exercising the emotional discipline Udwadia considers vital to success in the sector. “We are looking for founders who are doing things differently,” he says, specifically companies with competitive moats and long growth runways. Alpha Wave also made the decision to invest slowly through the early late 2010s and early 2020s, when Udwadia felt the sector was “fairly exuberant.” That deliberate approach led Alpha Wave to companies like Mad Street Den, an AI platform; Ola Electric, a producer of electric scooters; and Lenskart, an online eyeglass retailer, as well as Athletic Greens and Space-Ex which are now part of the firm’s investments in India and the US. (Alpha Wave is one of India’s most active investors with $2 to $3 billion in investments, though it is only a portion of the firm’s business; Alpha Wave has approximately $20 billion under management. Udwadia says.)

“It’s an interesting country with relatively stable management,” Udwadia says of Alpha Wave’s interest in India. “You’ve got the youngest population of its kind on the planet and a middle class almost the size of Europe and the USA put together. It’s also a country that’s approaching the bottom of the S-Curve; at approximately $4,000 of GDP per capita there’s a nonlinear jump in discretionary consumption, so that should start taking off soon. And then also it’s a domestically focused economy, which gives it some added resilience to global shocks.”

Udwadia is optimistic about the future of India’s startup sector, and the investing sector as a whole. ‘There are still a lot of businesses that I believe have no meaningful path to escape velocity—to outgrow an addiction to capital and become self-financing. But we’re certainly seeing far more sobriety, both on the founder side and the investor side,” he says. That’s the path to winning in an industry where the score is kept as clearly as in tennis, Udwadia says. “There are other firms fighting for the same returns, and you have a very clear win-loss scorecard.”

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