India Can Create World-Class Deep Tech Companies in the Next Five Years
It’s a good time to be part of the Indian tech startup eco-system. As the economy moves towards recovery post the global pandemic, investment and deal activity is gaining momentum again. Jatin Desai, Managing Partner at Inflexor Ventures, an early stage venture capital fund, believes that there is massive opportunity in the B2B/ Enterprise Tech space post COVIDas the pandemic has accelerated the digitization and automation plans of corporates and enterprises.
Jatinhas been involved with the startup ecosystem in India for the past few years & was also part of the US startup ecosystem in the mid to late 90s. He is currently General Partner at Parampara Capital (Fund-1) and Managing Partner at Inflexor Ventures (Fund-2). He brings along with him over two decades of global experience spanning Fund Management, Investments, Entrepreneurship, Technology/Operations roles.
Prior to co-founding Parampara and In flexor, he was the CIO of Bank of America & DSP Merrill Lynch in India. Before joining the bank, Jatin spent several years in US, EMEA & India in various roles dealing with Wall Street firms, Fortune 500 companies and SMEs/startup ecosystem. Currently, he is a Board Observer/Member and mentor for multiple Parampara Fund’s portfolio companies including Atomberg, Playshifu, SecurAx, Entropik, Cloudsek, Verloop, Singularity& Bellatrix.
In a lengthy conversation with StartupCity team, Jatin tells us about Inlexor Ventures’ focus areas for 2021 and highlights some of the most exciting tech startups Inflexor has backed.
Q. The Indian startup landscape witnessed turbulent times owing to the pandemic all through 2020. What lessons did this experience bring along for you as an investor? Also, how did Inflexor Ventures support its portfolio companies to navigate through the turbulent times?
A. The start of the pandemic was bit ofuncharted territory and black swan like event for investors, startupecosystem and the larger economy.After a couple of months,particularly around the lockdowns, things started to recover slowly and inching back to normal now.As investors, what we already knewgot even more validated in terms of not to panic when such events occur, slow down process of new investments till ecosystem has a handle on the situation, conserve cash and handhold our portfolio companies totide over the crisis and eventually things do recover and they did.We stood by all our founders, providing them advice and encouragement on a regular basis on how to tide over this crisis and also completed our follow-on investments in some of our portfolio companies.
Q. Given Inflexor Ventures’ expertise as a technology-focused VC fund that has led early investments in a host of deep tech startups, how do you envision the Indian deep tech market evolving and growing in the days to come? What role will Inflexor Ventures play in terms of fuelling the deep tech industry’s growth?
A. Deeptech has been developing and evolving as a sector in India only since the last few years. It’s still at a fairly nascent stage in India. Having said that, there is more acceptance/understanding of the sector today than it was 5-6 years back when we started looking at this space. This is validated with many funds expanding their investment themes to now cover deeptech ventures as well, which is a good start.We will continue with our vision to back such deeptech startups that have the potential to disrupt and transform the world, and create a deep impact on the society. If Indian deep tech startups get substantial funding from local industry titans, favourable government policies, and timely capital availability, we see no reason why India may notbe able tocreate some world-class deep tech companies in the next five yearsasChina has done in the last decade. We believe that the pandemic has provided a very favourable atmosphere for this to intensify.
Q. What are some major industry verticals that you see growing and expanding in 2021? What will be Inflexor Ventures’ areas of focus while looking for early-stage startups to back?
A. We see a massive opportunity in the B2B/ Enterprise Tech space post COVID as the pandemic has accelerated the digitization and automation plans of corporates and enterprises. We see AI-ML, AR/VR, Blockchain, IOT/IIOT, big data and other deeptech/emerging technologies being adopted at a faster pace across industry verticals.
Another interesting sector that has emergedin the last couple of years and we should watch out,is SpaceTech. We are adeeptech focused VC fund looking forstartups leveraging technology IP or innovation to create a competitive advantage, andcompanies thathave the potential to scale up across domestic as well as international markets.
While we are a sector-agnostic fund, few of the sectors that we want to focus more on from Fund II are FinTech, EduTech, ConsumerTech, HealthTech, CleanTech, AgriTechand opportunistic sectors like SpaceTech among others.
Q. You have earlier held various leadership roles in the tech world. How does your prior industry experience lend to the judgment calls that you make as an investor today? What are some of the major factors you take note of about an enterprise before backing it?
A. Having scaled up and exited our own startups, and having led the tech vertical at MNCs, the Partners of the Fund have gone through various crisis’ and economic cycles and have hands on experience as technologists both in India and US. These experiences help us better evaluate startups not only for investment but also for post investment value add and mentoring, when we help them handle any crisis or unexpected events,lendour experience of scaling up globally and eventually exitour investments. Given that we are early stage investors, quality of a founder’sprofile and outcome of our multiple interactions with them at pre-investment stage is one of the major factors we consider assuming that it’s a deeptech/tech IP based startup with at least some commercial traction. Besides that, market size, continuous R&D for maintaining the technology edge, competition analysis, entry valuation and exit potential are important factors as well.
Q. In your opinion, which are some of the most innovative or exciting startups in the Indian startup landscape currently? What about these startups caught your eye?
A. We have some very good examples of these from our own portfolio companies:
•Bellatrix Aerospace: Building next generation satellite propulsion systems and on track to get space qualification in 2021.
•Playshifu: They have literally created a new edutech toy category for kids of “phygital” toys with AR/VR capabilities.
•Entropik Technologies:Proprietary multimodal emotion recognition technologies combined with AI helps brands measure the cognitive and emotional responses of consumers to their content and product experiences with actionable insights.
•CloudSek:Leading AI-powered Digital Risk Monitoring platform that detects 3rd party data leaks instantly and helps automate monitoring of dark/deep web.
Q. Do you have any words of advice for tech startups and entrepreneurs looking for investors?
A. If you are in a sector that’sin favour right now, do raise a bit more than required to have some buffer. If you are not, then you will have to strive to persuade investors even harder for their allocation, but that can be mitigated by making a strong fundraising business case.Be yourself, be confident and passionate while pitching.The founder’s vision on the product and expansion strategy should come out effectively.Do not oversell or exaggerate too much as investors can easily see-through. Be genuine, accept short comings, if any,and have a plan/solution handy to fix that.
Jatinhas been involved with the startup ecosystem in India for the past few years & was also part of the US startup ecosystem in the mid to late 90s. He is currently General Partner at Parampara Capital (Fund-1) and Managing Partner at Inflexor Ventures (Fund-2). He brings along with him over two decades of global experience spanning Fund Management, Investments, Entrepreneurship, Technology/Operations roles.
Prior to co-founding Parampara and In flexor, he was the CIO of Bank of America & DSP Merrill Lynch in India. Before joining the bank, Jatin spent several years in US, EMEA & India in various roles dealing with Wall Street firms, Fortune 500 companies and SMEs/startup ecosystem. Currently, he is a Board Observer/Member and mentor for multiple Parampara Fund’s portfolio companies including Atomberg, Playshifu, SecurAx, Entropik, Cloudsek, Verloop, Singularity& Bellatrix.
In a lengthy conversation with StartupCity team, Jatin tells us about Inlexor Ventures’ focus areas for 2021 and highlights some of the most exciting tech startups Inflexor has backed.
Q. The Indian startup landscape witnessed turbulent times owing to the pandemic all through 2020. What lessons did this experience bring along for you as an investor? Also, how did Inflexor Ventures support its portfolio companies to navigate through the turbulent times?
A. The start of the pandemic was bit ofuncharted territory and black swan like event for investors, startupecosystem and the larger economy.After a couple of months,particularly around the lockdowns, things started to recover slowly and inching back to normal now.As investors, what we already knewgot even more validated in terms of not to panic when such events occur, slow down process of new investments till ecosystem has a handle on the situation, conserve cash and handhold our portfolio companies totide over the crisis and eventually things do recover and they did.We stood by all our founders, providing them advice and encouragement on a regular basis on how to tide over this crisis and also completed our follow-on investments in some of our portfolio companies.
Q. Given Inflexor Ventures’ expertise as a technology-focused VC fund that has led early investments in a host of deep tech startups, how do you envision the Indian deep tech market evolving and growing in the days to come? What role will Inflexor Ventures play in terms of fuelling the deep tech industry’s growth?
A. Deeptech has been developing and evolving as a sector in India only since the last few years. It’s still at a fairly nascent stage in India. Having said that, there is more acceptance/understanding of the sector today than it was 5-6 years back when we started looking at this space. This is validated with many funds expanding their investment themes to now cover deeptech ventures as well, which is a good start.We will continue with our vision to back such deeptech startups that have the potential to disrupt and transform the world, and create a deep impact on the society. If Indian deep tech startups get substantial funding from local industry titans, favourable government policies, and timely capital availability, we see no reason why India may notbe able tocreate some world-class deep tech companies in the next five yearsasChina has done in the last decade. We believe that the pandemic has provided a very favourable atmosphere for this to intensify.
Q. What are some major industry verticals that you see growing and expanding in 2021? What will be Inflexor Ventures’ areas of focus while looking for early-stage startups to back?
A. We see a massive opportunity in the B2B/ Enterprise Tech space post COVID as the pandemic has accelerated the digitization and automation plans of corporates and enterprises. We see AI-ML, AR/VR, Blockchain, IOT/IIOT, big data and other deeptech/emerging technologies being adopted at a faster pace across industry verticals.
Another interesting sector that has emergedin the last couple of years and we should watch out,is SpaceTech. We are adeeptech focused VC fund looking forstartups leveraging technology IP or innovation to create a competitive advantage, andcompanies thathave the potential to scale up across domestic as well as international markets.
While we are a sector-agnostic fund, few of the sectors that we want to focus more on from Fund II are FinTech, EduTech, ConsumerTech, HealthTech, CleanTech, AgriTechand opportunistic sectors like SpaceTech among others.
Q. You have earlier held various leadership roles in the tech world. How does your prior industry experience lend to the judgment calls that you make as an investor today? What are some of the major factors you take note of about an enterprise before backing it?
A. Having scaled up and exited our own startups, and having led the tech vertical at MNCs, the Partners of the Fund have gone through various crisis’ and economic cycles and have hands on experience as technologists both in India and US. These experiences help us better evaluate startups not only for investment but also for post investment value add and mentoring, when we help them handle any crisis or unexpected events,lendour experience of scaling up globally and eventually exitour investments. Given that we are early stage investors, quality of a founder’sprofile and outcome of our multiple interactions with them at pre-investment stage is one of the major factors we consider assuming that it’s a deeptech/tech IP based startup with at least some commercial traction. Besides that, market size, continuous R&D for maintaining the technology edge, competition analysis, entry valuation and exit potential are important factors as well.
Q. In your opinion, which are some of the most innovative or exciting startups in the Indian startup landscape currently? What about these startups caught your eye?
A. We have some very good examples of these from our own portfolio companies:
•Bellatrix Aerospace: Building next generation satellite propulsion systems and on track to get space qualification in 2021.
•Playshifu: They have literally created a new edutech toy category for kids of “phygital” toys with AR/VR capabilities.
•Entropik Technologies:Proprietary multimodal emotion recognition technologies combined with AI helps brands measure the cognitive and emotional responses of consumers to their content and product experiences with actionable insights.
•CloudSek:Leading AI-powered Digital Risk Monitoring platform that detects 3rd party data leaks instantly and helps automate monitoring of dark/deep web.
Q. Do you have any words of advice for tech startups and entrepreneurs looking for investors?
A. If you are in a sector that’sin favour right now, do raise a bit more than required to have some buffer. If you are not, then you will have to strive to persuade investors even harder for their allocation, but that can be mitigated by making a strong fundraising business case.Be yourself, be confident and passionate while pitching.The founder’s vision on the product and expansion strategy should come out effectively.Do not oversell or exaggerate too much as investors can easily see-through. Be genuine, accept short comings, if any,and have a plan/solution handy to fix that.
