‘India To Have 150 Odd Unicorns By 2025’ Says Yagnesh Sanghrajka, CFO, 100X.VC
Indian startups have been proving their worth over the days, and the market is bullish it seems. What do investment firms like 100X.VC think about the same?
In an elaborate tete-a-tete with Express Computer’s Gairika Mitra, CFO, 100X.VC gets candid about the way forward for Indian startups.
What role does technology play in emancipating the startup ecosystem? Could you lay some emphasis on food tech, health tech, and consumer tech?
I think everywhere, there is an infusion of technology, almost in all sectors, not just what you named. There are other domains too, like consumer tech. Food tech is a small space within consumer tech. We can treat consumer tech as one particular vertical, wherein you can touch the consumer in any particular manner. So, even a ride-hailing industry could be considered as consumer tech.
There is F&B segment, health, and wellness. These are all part of consumer tech, so it’s a very broad game. We are seeing technology in almost every sector. Agritech has also been booming quite a lot. A lot of agritech startups are looking forward to optimise the food supply chain, right from the farmer to the distributors, through the trader, and back to the consumer. In India, industries have grown quite sporadically. There was no single-handed technology, either introduced by the Govt., to streamline these industries. As a result, lot of disorganised growth has taken place, even in healthcare. However, now with the advent of technology, in each sectors. It’s hard to handpick any sector, that’s not touched by technology. That’s a very wide term, so one could keep diving down on that.
What role do you see IT vendors like that of Microsoft, AWS and Amazon playing in boosting the Indian startup space?
It’s happening already. Companies like Microsoft, AWS and Amazon are very strong players in terms of the Cloud space, and the way they are promoting startups are basically through their own platforms, by giving a lot of credits to startups. This is quite meaningful and valuable, as startup founders struggle to grow their product and platform, in order to make it a scalable one. These companies are playing a substantial role in boosting startups right from the initial phase, till the time the startup starts generating revenues. Thus, there is a meaningful contribution from these players. They have taken a lead in that, a lot of startups have benefitted from the same.
A lot of retired IT professionals, and even those serving under their professional capacity, have been venturing out to start their own startups. Any particular advice to them?
In my professional space, I have seen a lot of technocrats who have been consistent in identifying existing problems, and have been viable in arriving at impeccable solutions. This is the reason, most of these companies branch out, in order to start their own startup.
In these cases, a major shift in the journey that happens is, having worked in a corporate space, to their own venture, is a mindshift, from income to wealth. Typically, when a person works for an organisation, one is caught up into the daily hurdles of generating salary and earning revenues for the country. However, when one starts up, they start from the grass root level. The way of making wealth, is to make the product more and more scalable, and revenues come after a while. IT professionals should try to make it relevant to the customers, and not just their thought process. It’s a long and lonely journey.
What kind of tech startups is 100X.VC catering to at present?
We have a good mix of tech startups. There is a mix of consumer tech, HR tech and conversational AI. These days conversational AI is doing a commendable job, by getting blue collar workers, to create a resume through voice. That’s a breakthrough technology.
Apart from this, we have agritech and retail tech that has been doing fairly well. Most of these founders are coming up with great ideas. We have one company, that assesses road conditions, giving live updates, just like Google Maps. They specialise in giving live updates from road conditions, and how can they be improved. Apart from this, we have fintech companies, both on the lending and investing side.
How many startups does 100X.VC have currently onboard? What are their verticals like?
Currently 100X.VC has around 20. We launched in July 2019, so we have been quite lucky in that regard. The batch of 20, is equally distributed between B2B and B2C. As mentioned before, there is a good mix of fintech, agritech, HR tech, propriety tech and consumer tech. These are clubbed and equipped with the latest forms of technology like Artificial Intelligence (AI), Machine Learning (ML), and Deep Learning.
Do you deal with startups that are in varying stages? Like from a typical early stage to a Series D?
We call ourselves a discovery platform, because typically a funding round takes time, from an external person, like a serial investor. We saw this pain point and set up a VC fund, a seed staged fund to help out bootstrapped founders mostly, or maybe by incubators.
We strive to fund them with small cheques of INR 25-50 lakhs, however, we work closely with them, to make them investor ready. Another interesting initiative of ours is ‘iSAFE, that stands for India Simple Agreement for future equity. An iSAFE is a founder-friendly convertible security note, that’s beneficial for both startups and investors. iSAFE note takes the legal form of compulsorily convertible preference shares (CCPS), that is convertible on the occurrence of specified events.
Lastly, what are the odd chances of India becoming the largest startup ecosystem in the world?
Tough to say that, as India is a little behind the developed countries like the US. In order to become the largest ecosystem, we need to give it more time. This is primarily because the failure rate of Indian startups is quite high. The idea is not to have many startups failing. We want to have more and more successful startups. That’s where the whole differentiation lies.
However, 2018 and 2019 went well for us, where we had around 17 unicorns in two years, as compared to 4 and 5, compared to the last six and seven years. This indicates that the pace of creating unicorns is increasing, and we feel at least by 2025, when India probably reaches its 4.5-5 trillion GDP mark, we would have more than 150 odd unicorns in the country.
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