It’s an internet platform. It’s a holding company. It’s a VC fund. It’s Info Edge!

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It was a demo that led Sanjeev Bikhchandani, the founder of online classifieds giant Info Edge, to buy into the vision of Policybazaar. The year was 2008. At the time, insurance policy comparison in India was a fledgeling concept, and Yashish Dahiya, Policybazaar’s founder, was looking for someone to back his insurance comparison platform. At a meeting with the Info Edge founder, he made a bold claim. Dahiya, despite zero knowledge of Bikhchandani’s insurance purchases, told him that he was paying 60% too much for his car insurance. Sure enough, he proved this claim using his policy comparison platform. This piqued Bikhchandani’s interest, and shortly thereafter, Info Edge became the first company to invest in Policybazaar.

That bet—Rs 20 crore ($2.73 million) for 49% of Policybazaar’s parent company ETech Aces—has yielded tremendous value for Info Edge. Today, even after multiple venture funding rounds in Policybazaar have seen that stake reduce from 49% to 13.6%, Info Edge’s stake is valued at Rs 402 crore ($54.8 million). (To be sure, Info Edge invested another $50 million in the latest round.)

With Policybazaar entering the hallowed unicorn club (startups valued north of a billion dollars), Info Edge has found itself in a unique position. The company, India’s oldest listed consumer internet firm, suddenly had two unicorns in its investment kitty—food discovery platform Zomato being the other. Most venture capitalists would kill to have two early unicorn bets in their portfolio.

But Info Edge is not a VC firm.

The Investments

Nonetheless, with investments like these, it has found a unique way to create value for its shareholders. They’ve provided a huge boost to the company’s valuation, and it wouldn’t be wrong to call Info Edge one of the darlings of the stock market. In the last three months alone, its stock price has surged more than 14%, while it has seen a close to 46% jump over the past year. As of 26 October, its stock was trading at Rs 1,595 ($21.81).

Unlike VCs, who need to return most of their investment gains back to their own investors—Limited Partners (LPs)—Info Edge has no such compulsion. Because its bets are funded by cash generated by its own businesses. Prominent among them being its recruitment platform, Naukri.com, in addition to other platforms like 99Acres (real estate) and Jeevansathi (matrimonials).

But as Info Edge’s flagship vertical, Naukri’s leadership in the recruitment business is the engine that has powered the company’s investments. Cash on the company’s (Info Edge’s) books has gone up from Rs 478 crore ($65.2 million) in FY14 to Rs 1,606 crore ($219.8 million) in the first quarter of FY19, primarily driven by Naukri. Since FY14, Info Edge has clocked a 16% year-on-year (YoY) revenue growth, with its operating margin now standing at a healthy 33%.

Sure, the situation might seem rosy at first glance. But Info Edge is actually at a crossroads. Even as it remained rooted to its tried and tested practices, the ground has shifted beneath it. Info Edge’s own properties are coming under challenge. Naukri especially. As the HR landscape evolves, hirings are increasingly automated, companies are getting into data-driven recruitment, and candidates’ expectations of job platforms are increasing. And while it continues to be a market leader, Naukri hasn’t kept pace with progress.

The startup investment space, where once there existed enough opportunities for Info Edge to pick rough diamonds early on, is now crowded with cash-laden investors spraying and praying. Potential unicorns are not an endangered species, but unlike in 2008, they have many suitors to choose from.

So where does Info Edge go from here? Can it afford to continue its reliance on high returns from its investments? Or must it double down on its core businesses to remain the market’s darling?

Unicorns Wag The Dog

For Info Edge’s part, it might be tempting to stick to the status quo it has established. After all, it’s what led to Info Edge being the only non-venture fund investor in the country with two unicorns in its stable.

These unicorns are gifts that keep on giving. Take its investment in Zomato, for example. After Zomato’s latest funding round led by China’s Alipay, Info Edge has seen its stake come down from 30.9% to 27.68%. But at a $2 billion valuation for Zomato, this round provided Info Edge with a huge valuation boost.

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