Happy New Year to all!
One word to best describe 2019 for us was ‘Growth’
We grew as we added more founders in 2019 to our family. We moved our HQ from Mumbai to Bangalore. We felt it is best to be based where all the action. We sourced more deals, met more founders, drank more coffee :) We led two deals in 2019. To read about how our 2018 was, please click here.
Portfolio as on Dec 2019 By the Numbers -
# of investments closed: 13 (54% Bangalore, 23% NCR and 23% Others)
# of founders: 30 (50% repeat entrepreneurs)
Founders Age: 20% in 20–30 yrs ; 50% in 30–40 yrs ; 30% in 40+ yrs
Total work experience prior to starting up: 300 years across 30 founders
Business split: 54% B2C; 23% B2B; 23% B2B2C
Stage-wise split: 62% Angels; 23% Seed and 15% Others
Markup rounds expected in 2020: 6 (Kaarva, Khidki, Zestl, ShopKirana, SleepyCat, SureClaim)
Investing waterfall (% of deals sourced): ~32% Founder calls ~14% Founder Meetings ~1% Investments
Shutdowns: 0 ; Exit: 0
Sourcing channels: 41% Proprietary; 17% Referrals; 19% Platforms; 23% Intermediaries
2019 Portfolio Additions
Kaarva — Gemba Capital led the round on behalf of Lead Angels platform. Company has stellar set of co-investors and has grown ~10x in the last 15 months. Kaarva provides on-demand credit to salaried Indians. Some of the co-investors include Nu Ventures, EMVC, Better Capital, and some marquee angels. We have a Board Observer position at Kaarva. (Press release)
Finly — Gemba Capital led the round in Finly and also got new investors on-boarded. We have a board seat and we find Accounts Payable automation a hugely exciting space. Some of the co-investors include Social Capital, Das Capital and 91Springboard. Finly is a pure play SaaS business which will go global after validating the product in the Indian market (Press release)
SureClaim — is India’s 1st and only health insurance claim advisor. Co-investors include Astarc Ventures and marquee angels. Insurance claims is an area, which we feel is not yet solved and India needs a product like SureClaim for a much better customer experience.
ShopKirana — we participated in the Series B round. This investment was made to balance the overall portfolio risk-return dynamics. We also believe there is a huge upside still for ShopKirana. Their journey has just begun, and a large market is still untapped. Co-investors include Infoedge, Incubate Fund, NTPK, Better Capital and AET (Press release)
SleepyCat — investment was made in line with our thesis of investing in Challenger brands in DTC space. We invested along with DSG Partners and Mariwala Family Office. SleepyCat is a sleep solutions company, first few products launched are mattresses and pillows. (Our Blog on SleepyCat and Press Release)
Upekkha — is more of a strategic investment for us, since they are one of the best minds in India for catalyzing SaaS businesses. Co-investors include some of the most respected names in SaaS businesses in India. It also diversifies our investments in multiple SaaS companies indirectly through Upekkha.
Wysh — for us is an exciting company. It lets you book personalized video messages from your favorite celebrities. It is a B2C tech platform play with strong network effects on the supply side. Wysh is backed by a strong team and co-investors like Kalaari Capital, AET Fund, Whiteboard Capital.
2019 Investment Commitments
We have committed to invest in 4–5 startups in 2019, which will spill over in the first 3 months of 2020 for closures. These are:
> InsurTech startup in Corporate Health Insurance and Employee Benefits.
> India’s largest intelligent logistics platform for post shipment management.
> A B2B ecommerce platform for products made by rural artisans of India.
> Enterprise Workforce Experience platform offering workforce 360
> A platform for farmers enabling inputs, credit and output support.
Investment Thesis -
Our investment thesis got further refined based on our deeper understanding of the Indian ecosystem. We now have a proprietary ‘Founder Market Fit’ framework, which we use extensively to evaluate our deals. In early stages, where we don’t have answers to most of the questions, Founder Market Fit becomes a crucial element to the success of the startup. We have focused on this parameter more than anything else in 2019.
In terms of sectors, we believe being sector-agnostic makes more sense in early stage investing, however we are focused on SaaS and Consumer tech.
In terms of demographics, we like the ‘Budget’ segment in India (the middle and lower middle class) who now have access to internet on smartphones and good amount of disposable income to spend on discretionary consumption items whether content, goods or services. Some people call it ‘Bharat’ but we are essentially focused on customer demographics, it could be in a metro city or Tier-III city in India.
For SaaS, we like businesses which are product driven, ability to scale globally with increased ACV. We are backing founders in SaaS businesses who have the ability to execute at scale. By March 2020, we will have ~4 SaaS startups in our portfolio. (Our blog on SaaS in India)
We will continue to build a portfolio approach to investing and hence will also participate in some Series-A and bridge rounds. However, these will be more opportunistic decisions rather than thesis led. A majority of investments will continue to be in Seed and Angel rounds.
We will not lead deals in 2020 unless necessary. With a small team like ours, the time and effort taken to lead a deal far outweighs the incremental returns on that deal. We would rather prefer to spend that time with our portfolio, post our investment to add value.
Early stage investing is characterized by a lot of FOMO, noise, excessive reading lists and long feedback loops. ‘Time’ is the most important resource we have and we are conscious about it. 2020 is going to be more about ‘thesis driven sourcing’, ‘focused on prop deals’, ‘deeper relationships’; ‘founder networks’ and faster execution.
Collaborations and value add-
This year we launched Gemba Capital Syndicate on AngelList India. We launched our first deal in Insurance tech space during the Holiday season in December and yet got ~85% committed in the first few days itself. We have a good number of backers now and are confident of bringing excellent deals for them on the platform in 2020. We intend to at least bring 4–5 deals in 2020 to our Syndicate backers. (Reach out to us, to know the process of backing Gemba Capital Syndicate). We co-invested with marquee VCs and Angels in 2019 and will continue to do so in 2020.
We continue to get involved with all our portfolio companies on a regular basis. Scope and area of involvement differs from each company. Generally we have helped our portfolio companies accelerate growth — through introductions (client, vendors, hiring, advisers, consultants etc), market insight, fund raising strategy, and above all increased credibility.
A token of gratitude
As we look forward to an exciting 2020, we wish to thank all our founders, investors, advisers, co-investors who have supported us in this journey to help founders with intelligent capital. We are on our path to ‘institutionalize angel’ rounds and it would not have been possible without the support from all the friends and believers in India’s startup ecosystem.
Wishing all a great 2020!
The information set forth herein is not intended to constitute investment advice and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Gemba Capital. Gemba Capital does not solicit or make its services available to the public. Past performance is not indicative of future performance.
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