Manish Singhal feels the start-up ecosystem in India is going through a thesis transformation. Over the last 10-15 years, the emphasis among start-ups was to acquire market share using huge sums of venture capital and private equity money. Companies such as Flipkart and Ola are success stories of that model. But then, says Manish, “you can only do so much in that. And, those are costly models as well. You need large amounts of capital to make that model successful.” That thesis has played out and it is time for IP- and product-led ventures. “More and more investors are asking for IP,” he points out.

According to him, this product culture has started and VC money is going into these start-ups. This is a new thesis, IP- and product- led one. “It also reflects,” says Manish, “a maturity in the overall ecosystem because B2B always forms the rockbed of venture investing. B2B start-ups are a lot more capital efficient. They show progress.”


The product start-ups, according to him, may not raise billion-dollar rounds, but then they do not need to raise such large amounts to become billion-dollar companies. He is confident that there will be more of IP and product-led start-ups in the next few years. This augurs well for the Indian start-up ecosystem, which has seen quite a few Deep Tech, IP and product-led ventures solving problems that are typical to the country. pi Ventures, of which Manish is the Founding Partner, is an early-stage venture capital firm that focusses on start-ups in the Artificial Intelligence, Machine Learning and Internet of Things space.

‘India first’

These product and IP-led companies have a global application, which too is another change that has happened in the country. Earlier, say five years ago, an investor would look at a company with a technology product and evaluate whether it could sell its product abroad, because the Indian market was almost non-existent. Now, the domestic market has opened up for start-ups. “India has shifted from being a test market to a first market,” says Manish. They are building products that have global applications and they are able to go global because the product need is the same. “All these companies are solving problems which are global in nature. If they are solving in a differentiated way, their products will get accepted globally,” he adds.


Funding chart


Manish, who has wide experience in product and technology companies, coached founders and then turned an angel investor, before co-founding an angel investing platform. He then quit that venture to create a fund. Heeding the advice of an industry veteran who was his mentor, Manish realised that his fund should not be a “me-too” fund, but a specialised one. His investment in Locus, which is into Artificial Intelligence for start-ups, and his interest in algorithms, convinced him that his fund should focus on AI, ML and Internet of Things, all three hot areas now. That is how pi Ventures came into being in March 2016. The plan was to raise a ₹200-crore ($30 million) fund, of which it has raised about ₹160 crore ($25 million). It hopes to close the fund in the next few months.

Fund-raising has been difficult, says Manish. Isn’t that surprising given his angel investment background and industry experience? Not really, he replies. When you raise money as an entrepreneur, you typically have something working. You have a minimum viable product. But when you are raising money for a fund, you are selling a concept. And, when you tell potential investors in your fund that you will invest in AI start-ups, the first question they ask is, ‘AI in India?’

Investing in data

Manish says pi Ventures will invest only in companies where data can play a strong role. “We are still evaluating the depth of the market. There are a lot of AI companies in India. We meet 7-8 every week, but we are a little picky. We want to see certain things in the team, in the technology. We do not want to invest in a lot of companies,” says Manish. pi is an early-stage investor, most often writing the first cheque for the venture. Typical cheque sizes will be $500K to $1 million, with some money reserved for subsequent rounds, where it will go up $3 million (₹20 crore). The fund will invest in 15-20 companies overall.

In a little over a year since it started investing, pi has put in money in six ventures – three in the healthcare space and three in the enterprise space. “The kind of companies we like are the companies which have some advantage in getting hold of the data of that problem and then building an intelligence layer on top, to be able to give the customers something disruptive,” says Manish, of pi’s investment strategy.

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