27 Dec 2017 15:50 IST

Going beyond investment to make a difference

Besides funding, Ankur Capital helps start-ups tap the market, access other investors

Rema Subramanian and Ritu Verma, co-founders and managing partners of impact investment venture capital firm Ankur Capital, come from entirely different backgrounds. Rema is a cost accountant with decades of corporate experience, having worked in manufacturing and IT/ITeES sectors. Ritu has a PhD in Physics and an MBA from INSEAD and also has decades of corporate experience.

In their previous jobs, Rema’s forte was building companies from start to growth stage, while Ritu’s strength was in taking innovation from the lab to the market. When the two got together and started a venture capital firm, they decided to focus on start-ups that made an impact on the lives of a large number of people. Ankur Capital was born in 2014, when they set up their first fund.

“We wanted to make a difference,” says Rema, of Ankur, which raised its first fund of ₹50 crore. The two decided to focus on agriculture, affordable healthcare and education, three sectors that they felt were in need of not just large amounts of capital, but also expertise in building and sustaining businesses.

The idea, according to Rema, was to focus on sectors where technology and innovation could make a difference. “We focus on affordability and accessibility,” she says.

Wide portfolio

This is borne out by the investments that Ankur has made. Its portfolio includes CropIn, which digitises farm data to offer real-time insights on farm efficiency, productivity and forecast; Suma Agro, which tackles soil degradation and makes soil conditioners; Skillveri, which uses simulators to train industrial workers; ERC, which provides affordable eye care in the North East; Niramai, which has developed a cancer screening tool; Karma Healthcare, which uses a hybrid telemedicine model to provide primary healthcare to the poor in Rajasthan; and, Big Haat, a multi-brand agri e-store.

Rema says Ankur not only provides the much-needed capital, but also works with the founders to grow the business, tap the market and puts them on to other investors who may be interested in these sectors.

“Our first investment was in CropIn Technologies. The kind of entrepreneurs we look at are typically first generation ones. They may have a few years of experience (in other jobs) and that is the kind of companies we have invested in so far,” she says.

“There would be,” she adds, “an element of technology or some element of innovation that we would look at in most of the companies we have invested.”

Business strategy

Ankur is an early-stage investor, usually the first institutional investor in the venture. It comes in when the company has started seeing some revenue.

“When we say revenue, it is not that large an amount, but essentially proof of two things. One, there is a consumer who is willing to pay for it. And, two, that the entrepreneur can actually go out and sell,” explains Rema, of Ankur’s strategy. Ankur invests from ₹50 lakh to ₹5 crore in a company, over multiple rounds. It would typically look to exit its investments at the Series B stage. “In two of the companies we have invested in, we hope to see an exit early next year,” says Rema.

She explains that since Ankur comes in early, the risks for the venture are different and these risks change by the time the company is ready for the next round of growth. Then, she says, you would need to wait longer to be able to ride that wave. “Which we don’t think is ideal.” Ankur’s strategy is to exit its investments between three and years after putting the money in the companies.

According to her, both agriculture and healthcare sectors are now attracting a lot of mainstream, commercial investors, which eye the huge market opportunity in the country. When they see business models that are working, they are willing to bring in money and invest in these companies. Depending on when it invests in a venture, Ankur’s stake could be anything from 10 per cent to 20-25 per cent.

Looking for larger fund

According to her, Ankur will have exhausted its first fund by early next year and will shortly start working on a second fund. This is likely to be two-three times the size of the first fund. They decided to be conservative with the first fund because both were new to the VC world. Now, with experience, Rema says they will look at a larger fund and also look to increase the size of investments in companies.

But, they would continue to remain focussed on the three sectors, with the possibility of looking at allied sectors. For example, she says, they have been looking at a company that is working on regional language translation. It is cutting edge technology that is looking at AI and being able to predict language translation.

It has invested in 10 companies so far and another 3-4 are in the pipeline. With these, it would have exhausted the first fund.

Rema says agriculture and affordable healthcare are attracting a lot of new generation entrepreneurs, those who are looking at using technology to solve the problems of the millions.

Thus, the opportunities for Ankur are limitless, she says. Ankur, she adds, has created a platform called ThinkAg, which seeks to get industry and young entrepreneurs together, to be a catalyst in the agriculture space. “Being an early-stage ecosystem player, we want to go beyond investing, because with investing alone we cannot create a change,” she adds.

(The article first appeared in The Hindu BusinessLine.)