What a year 2021 has been! As I reflect on the year gone by, I just feel an immense sense of gratitude to every one in the Indian startup ecosystem, who has played a role in making 2021 as one of the best years for the Indian startup ecosystem.
It is not just about the number of unicorns in 2021, it is not about the huge capital investments, it is not about the IPOs or the exits.
It is about “the people” who make things happen.
It is about that entrepreneur, that angel investor, that General Partner, that Analyst, the lawyers, the bankers, the employees who chose to work in startups and above all the ‘customer’ — who all have played their part in us reaching here.
But like always, this is Day 1 for India. All good change happens slowly but effectively.
We need to be at it, creating new products, categories, markets and build an ecosystem full of aligned incentives for every participant and deep respect for each other.
Our journey at Gemba Capital till date can be clubbed in 3 phases:
2018 and 2019- ‘Laying the Foundation’. We started Gemba Capital in 2018. We spent time understanding the nuances seed and pre-seed investing, identifying key sectors, refining our investment thesis, building our evaluation framework and mental models, adding value to portfolio companies and building our own ‘right to win’ network and deeper relationships. Read our Year in Review for 2018 and 2019
2020 — ‘Riding out the storm’. As Covid pandemic struck, 2020 was quite challenging for us at Gemba. However, every crisis has a silver lining and brings new opportunity to advance. We started our Syndicate on AngelList and were overwhelmed by the positive response it got. Our deal activity picked up pace and we invested in 10 new companies by year end. Also, we invested in more pre-seed companies compared to last 2 years. This required high conviction on founders and market. Our proprietary ‘Founder Market Fit’ framework helped us assess right team to back and strong sector thesis helped us take quick investment decision. Read our Year in Review for 2020
2021 — ‘Gaining Foothold’. This is the year we found our ‘Momentum’. We recorded 1 cash exit (Finly) and said “No” to 4 more exit opportunities from our portfolio. This was a blockbuster year of follow-on rounds ~50% of our portfolio raised follow-on (15 follow-on rounds~5x jump compared to previous year). We got our SEBI AIF license this year and we added 10 new startups to our portfolio.
For us at Gemba Capital, it was a good year.
>65% of the total capital is deployed in 2021 alone.
Avg. cheque size per deal has doubled in 2021 as compared to 2020
>50% in soft commitments in Gemba Capital Fund I (Fund target is US$10M)
~25% of total capital deployed is in follow-on rounds (expecting it to cross 40% next year)
4 companies where we invested pre Y Combinator in 2021
Total capital raised by the portfolio is ~US$200M
75% of the deals in the portfolio have been sourced through referrals and outbound/proprietary.
Total number of partnerships for free credits/discounts for portfolio companies stands at 29 worth a total of ~US$100K
>50% of our founders in the portfolio are repeat entrepreneurs.
2021 Portfolio additions
We started the year by closing deals which we had committed in 2020 Oct-Dec. First one was Crejo, we participated in a US$3M pre-seed round which was led by Matrix Partners, 021 Capital and supported by marquee angels.
We invested in Verak (earlier known as BimaPe). This is our 3rd deal in the Insurtech space, first two being Sureclaim and Plum. It was a pre-seed round led by Lightspeed India partners and then followed by Y-Combinator.
We invested in Wint Wealth (earlier known as GrowFix). This was our 2nd deal in the alternative investment space. A US$2M round led by Zerodha’s Rainmatter Capital.
We invested in Strata. This is our 3rd deal in the alternative investment space. This deal makes us probably the only VC which has 3 startups in alternative investment space in the portfolio. It was US$6M round, led by Kotak Investment Advisors and supported by Mayfield, Elevation, Zerodha founders.
We invested in Inai pre Y Combinator. They went on to raise US$4M from various global investors in the seed round.
Defy — our first investment in the Web 3.0 space is a social exchange for Crypto. Round was a US$5.5M seed round led by global investors. We invested pre-YC in this deal as well.
We invested in community SaaS management platform Threado — a unified control centre that integrates with multiple tools to manage and grow an online community. We were the first investors to commit in the pre-seed round which was led by a global VC .
We invested in online clinic SaaS for dietitians & nutritionists globally called Zoconut. We were the largest cheque in the seed round along with other marquee SaaS investors.
We invested in SBNRI- a vertical neo banking platform for Non-resident Indians to bank and invest better. Round was led by Quona Capital — global fintech focused VC along with Better Capital, marquee family office and angels.
Neodocs raised pre-seed capital. We invested pre-YC and have backed them in the follow-on round as well, which is led by a Global VC.
We invested in Delightchat —a customer support SaaS product for online direct to consumer (D2C) brands globally. We invested along with First Cheque and marque angels.
TranZact was a US$7M round led by Tribe Capital and Prime Ventures. We were one of the first investors to commit in the round.
2022 — Put the pedal to the metal
Gemba Capital Fund I received its AIF license this year from SEBI. We have crossed 60% commitments out of our US$10M fund. Key focus in the next 2 months will be to make the Final Close and then start deploying capital.
Early stage investing is a marathon and not a sprint.
Will continue to be long-term thesis-led high conviction investor with low friction collaborative checks in seed rounds.
Will continue to back high quality founders in large and growing markets. Portfolio construct is a nuance which we will focus on since getting a winner from a portfolio of ~24 companies vs 100 requires more thematic approach. Small portfolio also helps us to work closely with our portfolio companies and add more value. We are already incubating a couple of startups and have a strong deal pipeline for the Fund in 2022.
Focus Areas in 2022
Our SaaS investing playbook remains the same. We will look for opportunities within Vertical SaaS, SaaS enabled marketplaces targeting undigitized markets in India and Shopify kind of models for various consumer segments.
Within Fintech, we will continue to invest in insurtech, alternative investing, financial infra/ APIs/ embedded finance, vertical neo banks, new age tech product led financial platforms and intersection of fintech with other sectors such health tech, agritech.
We will add deep tech to our investing thesis this year in 2022. Within consumer tech, we are keen on Health tech, Gaming and Edtech.
We are bullish on Web 3.0 as blockchain emerges at new age computing platform after mobile, cloud revolution. We are still very early in crypto/Web 3.0 but it is here to stay. We will look for infra and platform plays in Web 3.0 going global from day 0.
Gemba Capital Fund 1 is a new milestone in our journey to invest in seed rounds in scalable tech startups led by founders who have an unwavering ambition to build world-class companies.
If you are a founder hit us up at email@example.com
A token of gratitude
Everyone who has helped in our journey — a big thank you. It is not easy for any Emerging Fund Manager in the VC ecosystem to raise the first fund. It takes a village, and I am grateful to all who have helped us with warm introductions and guidance. Thank you to all the world class founders who allowed us to be on their cap table, our co-investors and to all the syndicate members, who have shown faith in us and our ability to pick and evaluate good deals.
A big thank you to our LPs in Fund I, for believing in us. Our lawyers, fund admins, who have worked tirelessly this year to make sure we succeed.
Onwards and upwards from here as we strive to build one of the most respected domestic micro VC Fund in India.
We wish you all a great 2022!
From all of us at Gemba Capital.
Disclaimer: This blog is a Year in Review performance blog and not a solicitation of any kind for anyone and neither it is a part of any marketing docket/collaterals/documents of Gemba Capital.