Infra.Market - The outlier writing a new playbook

Earlier today we announced a Series-D round of $125 Million at Infra.Market, a piece of news that appears astonishing to most outsiders, but could almost be described as “business as usual” at Infra.Market

In the little over two years that we have known Infra.Market, first as outsiders, and then as privileged insiders, the firm has grown over 70x in revenues, and has built, not just the market-leader in the space of procurement for construction, but created an entirely new playbook for manufacturing & distribution of materials, a $200+ Billion market with significant tailwinds. Most impressively, they have also consistently delivered a rare, best-in-class combination of growth and profitability.

Along the way, we (and the founders…and our co-investors) have been asked several times :

“So….which company / model / playbook is an analogy for what Infra.Market is doing ?”

One of the best kept secrets in the world of VC is that a surprisingly large number of investment decisions hinge (and are sometimes entirely based) on the answer to the above question.

True to #vclogic , the notoriously opaque world of Venture Capital comes with many “biggest secrets” and “most important rules”.

Perhaps two of the more important are

• Long-term investing rewards discipline and focus (rather than a speculative, “spray and pray” approach)

Source : Dilbert.com

• …but the best-performing investments often are outliers that don’t seem to neatly fit into pre-defined rules or predictable patterns 

Source : Dilbert.com

In so many ways, we have seen Infra.Market epitomizing this dichotomy : Combining a company that delivers an extraordinary set of business performance metrics, with one that seemingly went about doing things entirely its own (uncool) way.

With the benefit of time and the privilege of insider-access, we have come to realize that Infra.Market has had a playbook all along, one that it has been following with remarkable discipline.

And so, staying true to the old VC tradition of ̶c̶l̶a̶i̶m̶i̶n̶g̶ ̶t̶o̶ ̶k̶n̶o̶w̶ ̶h̶o̶w̶ ̶a̶ ̶p̶h̶e̶n̶o̶m̶e̶n̶a̶l̶ ̶s̶t̶a̶r̶t̶u̶p̶ ̶s̶u̶c̶c̶e̶e̶d̶e̶d̶ ̶b̶y̶ ̶o̶v̶e̶r̶s̶i̶m̶p̶l̶i̶f̶y̶i̶n̶g̶ ̶t̶h̶i̶n̶g̶s̶ celebrating a successful portfolio company, here is our teaser to Infra.Market’s playbook :

Service, service and service

“ Asset-Light or Asset-Heavy ?” — It is one of those questions that VCs end up debating intensely on, on which setup is better equipped to win a venture-backed space.

LOL, just kidding — The decidedly popular view in the industry has been in favour of Asset-Light business models, and to be fair, there is overwhelming evidence from the last decade to corroborate this opinion.

We at Foundamental recently debated (Or, as we like to call it — Dis/Agreed) on the topic and felt that this question needed to evolve in line with the demands of more traditional industries such as construction, and thereby ask if Construction-tech firms should be “Service-Light or Service-Rich ?”

In our view, for industries and use-cases that are missing enabling infrastructure or digital layers that facilitate transaction fulfilment, a service-rich approach (Think of a trusted Project Manager that owns end-to-end responsibility for the transaction) comes closest to finding the best of two desirable worlds : Delivering high customer satisfaction, especially for high-frequency and high-criticality transactions, and capturing an attractive share of large (previously inaccessible)profit pools.

While several Foundamental portfolio companies embody this Service-rich approach, Infra.Market currently occupies the pole-position in terms of executing on a Service-rich model at massive scale.

Detailed Bookkeeping is the new Killer Pitch

Every founder (and every VC that supports their portfolio founders’ fundraising efforts) has always ended up asking 

“What would it take for my story to become the Killer Pitch for VCs ?”

• Charisma and selling ability ?
• Being the first (or most prominent) to market with an “X for Y” model that investors are looking to back ?
• Luck and Timing ?

What if I told you that in Infra.Market’s case, the Killer Pitch isn't even a Pitch deck to begin with, but meticulous bookkeeping ?

To be more precise : A highly detailed, and highly specific MIS (Management Information System) that vividly describes the strengths and weakness of the company, and its profound achievements.

It is of course, quite easy (and maybe even justifiable) for venture-backed startups to not choose to invest the time to prepare an extremely detailed MIS. However, as we have seen with Infra.Market, cultivating this habit can yield disproportionate rewards — Including, bestowing upon the founders the Superpower of attention-to-detail, a must for every (eventually) successful founder.

Execution Moat is the greatest of all moats

When founders, investors and students of business management are taught about “moats” in business, the discussion almost always is centered around network effects as well as technological & cost advantages.

But what if you, as a young venture-backed company (or the space you operate in), do not have the privilege of benefitting from any of the traditionally-defined moats ?

Well, as Warren Buffet had said :

The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.

What if, much like, the other aspects of Infra.Market’s playbook, the source of its moat is also singular, and derived from its service-rich model and its incredible attention to detail ?

I am referring of course to Execution Moat : A moat that is the result of the sheer execution and the relentless discipline to focus on what is required to consistently and continuously deliver best-in-class performance metrics.

And that, perhaps, ought to be the key takeaway from Infra.Market’s playbook — Everything from the business model & approach, the story & pitch, and the day-to-day and what lies beyond — Is centered on what is required to keep delievering extraordinary performance and match the standards (and ridiculously high expectations) that Infra.Market sets for itself.

True to the ethos of a business built on execution-moats, this playbook only delivers its potency when wielded by masterful founders who understand its profound implications. And in Souvik and Aaditya, we found not only the ideal pair of founders to write and execute on this playbook, but also built an enduring bond of friendship and admiration.

We at Foundamental have been immensely proud of the many rules Infra.Market has been breaking and rewriting on its path to becoming the defining Construction-tech company of our generation. 

But what we are most grateful for is that while it breaks all other rules, Infra.Market has relentlessly delivered on perhaps the most important rule that every founder and business is held accountable for : Delivering extraordinary shareholder value, sustainably.

Thank you Souvik, Aaditya and Team Infra.Market ! 

We know that you are still only just getting started…