Unitus Ventures plans to launch a new VC fund with a focus on job tech companies. The firm will start raising capital for this new fund over the next few quarters and expects to make a definite announcement by the end of this year. Some of the portfolio companies of Unitus Ventures include Cuemath, Careerninja, Milaap, Bandhoo, and Masai, among others. The early-stage venture fund has launched two funds till now. ₹140-crore Fund I was launched in 2013 and ₹210-crore Fund II was launched in 2018. BusinessLine spoke to Surya Mantha, Senior Partner at Unitus Ventures, about the firm's upcoming fund. Excerpts:
Why did the fund decide to turn focus on job tech companies?
In our current fund, the initial thesis was that we would be backing entrepreneurs building utilitarian essential services for India. Essential services mean access to jobs, access to healthcare, finance, fintech, edtech, and so on. Now in the process of building our portfolio, we ended up with a portfolio that was very heavy on companies that were in some way or shape, affecting jobs or employment opportunities. Essentially, companies which address the challenge of jobs from one angle or the other. So that’s the lens with which we will be looking at our upcoming fund.
How do you define job tech space in your investment thesis?
When we talk about job tech, it includes future work platforms like job matching platforms or a gig worker platform but is not limited to that. It also includes those platforms, skilling companies like Masai, CareerNinja, and other edtech companies training youth in various job-ready skills. The other end of job tech also includes a matching platform, where you have all the companies helping SMEs, with access to capital, automation and digitisation, and so on. We will also be investing in companies that have come up with new ways of doing things that will maybe take away jobs today but will create new kinds of jobs.
What is the market potential for the companies focusing on this segment?
Creating well-paying, meaningful jobs for the millennial generation is one of the defining challenges for India over the next decade and a half. There are some 80 million people who are currently looking for jobs in India and a million people who enter the job market every month, and they will do so for the next 20 years. There are 70 million people who need upskilling and there is a huge gap in women's participation in the workforce. On top of that, technology adoption is moving at a rapid pace which puts hundreds of millions of jobs at risk of becoming obsolete.
Another interesting data point is that India, for an economy of its size, has relatively few large enterprises that have revenues of over ₹1,000 crore. The country has about 60 million MSMEs, employing about 110 million, which is a good number compared with the rest of the world. But Indian SMEs are among the unproductive and inefficient companies in the world. When we put all these things together, there is a huge, almost defining challenge in this space.
In your current investment portfolio, there is a good percentage of companies working in the gig economy space. Does the firm have a specific focus on this segment?
I think gigification of work is something that is going to be here to stay. It will probably find its way in several industries, whether it is the on-demand economy, sharing economy, or even traditional brick and mortar. Even large corporations face troubles in managing fixed costs, and they have these projects that they have to execute, like once a month. For such projects, they want to work with a partner that can use technology efficiently, execute the project in a dispersed fashion across the country, deliver results and charge only for the output. It's good for enterprise, just because it brings down fixed costs, and it is also good for women in particular who want flexibility, particularly for digital work.
Do you think such gig economy management platforms will help in improving the gig economy working conditions in various sectors?
It is important that we protect the gig workers' interests as well. The government’s upcoming policies on pensions, and carrying pensions from one platform to another is all going in the right direction. In addition to this, companies like Betterplace, Gigforce will also play an important role in proactively implementing these policies, and making sure that the workers' interests are also protected. I think one of the very important things that will happen here is that VC-funded large organised players in the gig platform world, will help in protecting the gig workers’ incomes and interests.
Edtech space is seeing a movement from K12-focused to upskilling-related investments and acquisitions. What is your assessment of this shift in the edtech sector?
The first wave of investing and activity in edtech has largely been in the K12 space. And before that, it was test-prep. But now with the pandemic, everything has moved online and trends that would have taken 10 years to arrive, have happened in the span of 10 months.
And I think the next wave of action will be in upskilling and we will see all manner of innovative models in this space. Whether it is for IAS prep, for learning software or for learning how to sell online, digital marketing etc. Today, the way young people learn is very different from how people used to learn 10-20 years ago. Attention spans are lower, they are a digital-first generation. So how they consume learning online, will also see a lot of innovation. But overall, I think this is a gold rush because the market is huge and the need is huge.