Emerging Entrepreneurs

Agri, health or education, technology is the key for this investor

N Ramakrishnan | Updated on January 06, 2020 Published on January 06, 2020

Rema Subramanian, Co-founder and Managing Partner, Ankur Capital   -  N. Ramakrishnan

Ankur Capital nurtures ventures in innovation and technology

Rema Subramanian and Ritu Verma, co-founders and managing partners at Ankur Capital, set up the early-stage venture capital firm focussed to leverage the innovations that were happening and the technology that was being developed for sectors such as agriculture, healthcare, education and financial technology. Both had decades of corporate experience; Rema had a financial background and had started two ventures herself, while Ritu, with a Ph.D in Physics, had worked in large companies taking innovation from the lab to the market.

Their thesis was to leverage the technology for the larger good and help fund start-ups in the agri-tech and health-tech sectors to reach a level where they would be able to attract funds from larger investors.

“About 70 per cent was in agri-tech, 25 per cent was in health-tech and the balance in enablers,” says Rema, of Ankur’s first fund of ₹50 crore, which it finished deploying last year.

Investment thesis

Their investment thesis was guided by the growing digital presence of a large number of the population, especially in rural areas, and the increasing mobile penetration thanks to which the “next billion” could be reached – they were interacting as producers, suppliers or consumers and could digitisation bring in more efficiencies to this process. Use of technology and innovation have been the pillars of Ankur’s portfolio companies.

Ankur has now started investing from the second fund, a ₹350-crore fund of which it has achieved first close at 70 per cent of the fund’s size. “We have already got commitments for 90 per cent of the fund. It is both international and domestic investors,” says Rema.

 

 

According to her, Ankur used to invest up to ₹5 crore from the first fund. From the second fund, it will start at ₹6.5-7 crore and with follow-on rounds, go up to ₹35 crore in a company. “We will now do pre-Series A and a little bit of Series A, pro rata. Earlier, we were largely in seed stage, but the amount of money we could bring to the table was small, which is what we will now be able to increase,” she says.

With a larger second fund, will they invest in more companies? No, says Rema. Ankur invested in 14 companies from the first fund and will probably do a couple more with the second fund. They will restrict themselves to 16-18 companies. Ankur will go deeper in its engagement with the companies because the amount of money required for them to reach a scale where they would attract larger VC funds is now much more.

Rema points out that ventures now require $5-10 million to get to the Series A stage. The cheque size in the Series A stage has gone up quite significantly. Salary levels have gone up, the companies need to invest in branding and marketing. Since these are technology ventures, they need to hire the best talent; tech people are expensive to hire. If you need to get a good machine learning person who can build the algorithms properly, then that person costs money, explains Rema.

Focus areas

Ankur Capital, says Rema, will continue to look at the sectors it focussed on with the first fund, but will take a greater interest in the fintech space with the second fund. This does not mean it will invest in companies that are into lending, but look, for example, at ventures that are into wealth management for the next billion or getting the un-banked population to be banked and getting them to be digitally savvy.

On the investment climate, Rema says they continue to see a lot of interest. They are seeing a lot of innovation happening. Industry is seeing that its main markets are getting saturated and keen to get into new markets. Globally also, she says, people are looking at India as a hub for agri-tech innovation. A number of large global funds are eyeing the Indian market. Simultaneously, farmers are getting savvier and are at ease using smartphones. They feel they need to do things differently. “Things are ripe for the sector to scale up. We are seeing a lot of interest there,” she says.

Ankur Capital got one exit from its first fund; the promoter of Carmel Organics, a company it had invested in, bought back the shares. “We had a good exit,” Rema says. Ankur is also looking at partially exiting some of its other investments, as the companies raise larger rounds of funds. From the second fund, the exits would come when the ventures go for larger fund-raises or through strategic sales.

According to Rema, ThinkAg, an AgTech platform that Ankur Capital had floated and seeded, is now an independent entity with its own CEO. Ankur has only an arm’s length relationship with ThinkAg, which has been positioned as an industry platform. Its main task will be to enable interaction between the innovators and the large companies, at the CEO level, so that both of them benefit. ThinkAg will get its income from organising events and membership fees.

Published on January 06, 2020
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