Venture Catalysts: Democratising The Start-Up Ecosystem Amidst Pandemic
The worldwide pandemic brought to the fore a world of challenges brewing with uncertainty for businesses across. Doing nothing in such an environment was a sure-shot way to obsolescence while learning from certain firms, which navigated well to emerge stronger and resourceful would be evolutionary. Venture Catalysts is such a choice to learn from, for its transformational ways during a pandemic, bringing a definitive democratic shift in its operating ecosystem of start-ups. Venture Catalysts, is currently the first integrated incubator of India with diversified portfolios nearing USD 150,000.00 to USD 1.5 Mn. In the parlance of Venture Capitalists, the early stage start-ups have an unlimited potential that needs to be harnessed in crafting a significant value. Hence, they invest intelligently in pre-seed, seed and pre-series A rounds to bolster the start-ups strengthening. As of now they have crossed over 207 investments in more than 178 unique start-ups and continue to do so. With portfolios valued over USD 5 Bn they comprise of start-ups like BharatPe, Zingbus, HomeCapital, Beardo, SuprDaily, Fynd, Innov8, PeeSafe, IGP.com, Coutloot and BlowHorn, among others.
Interestingly, the collective decision-making is embodied in its investment committee, which constitutes former venture capitalists, experienced hedge fund owners, freelancers with the flavour of having exited from large start-ups, and core investment bankers. They sort through more than 700 start-up pitches in a month. Venture Catalysts from its shortlisting and potential assessment, invests in around 100-150 start-ups in a year, less than 2% of the start-ups sorted through annually. The ideation stage is more intricately linked to the founders’ capabilities, the attractiveness of the sectors, and the novelty quotient, among other things. For the further seed fund stage and pre-Series, A, the product-market fit takes priority. One thing that though remains constant, at the end of the day, is that the founders are a key pivot for arriving at a decision on investment for any venture capitalist.
Locally bred individual forays imbibing global thought have always made significant impact on the germination and behavioural development of a start-up ecosystem. The defining features and confines of any such ecosystem is concomitant with the adaptive agility of the ventures operating in its environment. An engaging and open ecosystem guided by actor-player nurtures the innovation quotient, entrepreneurialism and local dynamics of the system.
Early in the conception stage, the core team of Venture Catalysts noticed that more than two-thirds of the start-ups were based in big cities in India like Delhi, Hyderabad, Bengaluru, Mumbai and Chennai, whereas garnering capital investment opportunities were more in tier-II, tier-III cities and beyond. Aiming to go off-beat, it set up facilitation centres in smaller cities with developing infrastructural capabilities like Surat, Raipur, Dehradun, Kanpur, and Lucknow, and started educating potential investors (with financial acumen and risk-taking capabilities) on the opportunities of high returns available in start-up investments. Thus, an opportunity was capitalised on to initiate the democratisation of the start-up ecosystem.
Democratising the start-up ecosystem in pandemic times
The spurt of incubators and accelerators across tier-II, III cities and beyond is an unprecedented phenomenon. Available data suggest that the chances of getting funded increase three times for a start-up after becoming a part of an incubator or accelerator. India is found mirroring the trend that has been playing out in the biggest start-up nation of the world, which is presently the USA. These angel investors in tier-II, III cities and beyond are steadily realising the mop-up high return opportunities in start-up investment. The migration from the larger cities is an indicative sign for local start-ups to grab the potential for themselves. Planning their start-ups in their own city, leveraging the low cost for talent acquisition and operational costs provides for achieving profitable returns within a faster turnaround time.
Democratisation has thus created an enabling ecosystem for more investors to explore the high–return asset class, create enhanced performance opportunities and thereby, drive the competition among venture capitalists in the market on improvising the start-up valuations. Successful start-ups are considered indispensable for a country’s economy, and the nation enjoys numerous socioeconomic benefits from their efforts, such as job creation and marketable innovations. Aligning with this thought, Venture Catalysts have managed to democratize the start-up ecosystem, with a network of more than 5000 angels across 35 odd cities in India, especially from tier-II and tier-III cities.
Leaders foresight
Venture Catalysts finds itself in the thick of things, with a mammoth invested figure of more than Rs. 500 crores by itself and crossed the $1.2 billion landmark of cumulative value for all portfolio companies. The ability to foresee a future arriving at the democratisation of a close-ended start-up ecosystem fuelled the business and today Venture Catalysts have taken the leadership pole position in start-up investments and incubation, by democratising the start-up ecosystem.
The author is co-author of "The VUCA Company”, “The VUCA Learner”, "VUCA in Start-ups" and “Role of Business Incubators in the economic growth of India”.
