Incubate Fund India in 2020
By: Nao Murakami
Tags: Japan, India, Startup, Venture Capital, Investment

This year has been the hardest year for the most of people in the world, and maybe harder for many early stage founders and seed stage micro VCs. Still uncertainties are all over the world but we can now see many hopes as well.

We, Incubate Fund, invest at pre-seed to seed stage, usually as a lead investor. We closely work with each one of portfolio founders so have seen so many ups and downs among portfolio this year. Many tough decisions, some crying board meetings, a couple of un-expected exits… but we have been so much encouraged by and proud of how our portfolio founders have survived and even the most of them kept growing under this turbulence. We saw more strong convictions and good entrepreneur spirits than any previous years of operation in India. We are now more confident about our portfolio founders and their future success.

We hope 2021 would treat the world better and become the year of hope for Indian startups. We would work hard to contribute to the healthy growth of Indian startup ecosystem in coming year as well.

New Portfolio startups in 2020

We have done 5 new investments and welcomed them to our portfolio community. Below are those companies.

Plum: Plum is an employee health insurance provider which makes Indian group health insurance more easy, transparent, seamless, and affordable. Founders’ vision aligns with us from the day-1 and we had no doubt on their execution capability so we invested in the startup right after the incorporation (pre-seed stage). The startup has shown remarkable growth and raised successful subsequent funding from Sequoia Surge and Tanglin Venture Partners in November.

Captain Fresh: Captain Fresh is a B2B platform leveraging technology to build the fastest and the most efficient harvest-to-retail supply-chain in fresh fish and seafood industry. Founders showed us a very deep understanding of a unique industry and the past few months of traction growth was impressive so we invested in the startup at the seed round along with Ankur Capital.

GigIndia: GigIndia is a gig-worker platform which supports enterprises to scale faster & optimise costs. Their proprietary AI-engine automates most of its operation process so they can assure the high output quality with optimal costs. This is very unique and makes the startup scalable with profitability. We invested in the startup at their pre-series A round as a lead investor.

Gourmet Garden: Gourmet Garden is a Direct-to-Consumer (D2C) brand which offers high-quality organic/natural vegetables and fruits. They provides farming solutions which includes methodologies and technologies to small farmers and increase yield and product quality. They also built their own supply-chain model which allows them to deliver F&V products fresh at customers’ door steps. We lead their pre-series A round along with Whiteboard Capital.

Not Yet Disclosed: A startup building a great tech enabled supply-chain in pharma and medical device industries.

Including above 5 new startups, we are now have 15 portfolio in India.

Great variety of startups in good variety of industries… from Insurance to seafood to vegetables to pharma to gig-workers. But most of them are B2B (or B2B2C). So we are keen to make a couple of good B2C investments in early next year and now building a thesis around gaming, mobile entertainment, communication, commerce, and education. Oh.. also healthcare! Any seed stage healthcare startup (either B2B or B2C) with a business model which utilize data to fuel an exponential growth and global expansion, please contact us! (and also casual brainstorming session on investment thesis building is always welcome!)

Excelent Resilience to pandemic

The pandemic impacted almost all of our portfolio in some ways. However, even under such tough period, they have shown strong resilience and growth. Here are some examples.

ShopKirana: Optimized its operation during lockdown and increased its profitability by 2X with keeping top-line growth. Continue to be the market leaders in the category. Closing pre-series C round soon.

Yulu: Bounced back from lockdown and now they are proving their model works the best in micro-mobility startups. Closed $4M pre-series B round led by RocketShip in June.

Plum: Acquired more than 200 clients within 9 months from its service launch. Has shown 200% QoQ growth. Received subsequent funding from Sequoia Surge and Tanglin Venture Partners in November.

WizKlub: Because of COVID and lockdown, they were forced to close all the off-line schools. Pivoted quickly to full on-line model and already crossed pre-COVID numbers. Raised pre-series A round in October.

Gourmet Garden: Even under COVID, their revenue has grown 12X in one year. Successfully launched the second city operation in Chennai.

GigIndia: 2 impactful events happened to the startup… lockdown and China app ban. Lockdown took their field work clients completely and the ban removed their Chinese clients. They recovered quickly and recorded highest monthly revenue number in November, 2X comparing to January.

New Member Joined in 2020

We finally hired our first employee who actually add very big value to our team.

Rajeev joined us in May 2020 but we know him for more than 3 years. We first met him in the late 2016 when we made an investment in ShopKirana which became our first investment in India. Rajeev represented Lead Angels at that time and we co-invested in ShopKirana. Since then, we have been working on a couple of deals together and became a good friend as well. So, when we started thinking about hiring an investment officer, he naturally popped-up as one of the top candidates for us. However, being a friend and working as a colleague is totally a different thing so we spent more than 6 months to discuss our vision, investment philosophy, culture, his career path, etc to make everything aligned. Now, after 7 months of working together, we are (entire Incubate Fund team including Bangalore, Japan and Singapore team) positively surprised how Rajeev fits us and already became a valuable asset. We are so glad to have him on our team and we will build more and more success stories together!

Our 2nd India Focused Fund is ready

We started raising our 2nd India focused fund in 2019 and we are now about to make the final close with approximately $20M. We much appreciate all of our LPs especially because they believe us in such an uncertain period and have been continuously supportive.

Our focus would remain the same but re-capping…

Seed round as a lead investor: 1st VC round is ideal. Typically demands minimum 10% shareholding.

1st VC round is ideal. Typically demands minimum 10% shareholding. Fast decision making process: We give indication/commitment to founders usually within 1–2 weeks from the first meeting.

We give indication/commitment to founders usually within 1–2 weeks from the first meeting. Hands-on approach: We work very closely with founders. We have a weekly call or meetings with most of the portfolio startup founders.

We work very closely with founders. We have a weekly call or meetings with most of the portfolio startup founders. Sector agnostic: We can invest in anything which we can understand

We can invest in anything which we can understand Selective: Will make only 10–15 new investments from the fund

Will make only 10–15 new investments from the fund Continuous Support: Reserve about 50% of fund corpus as a follow-on budget. So, now we can participate and support successful portfolio up to series B round.

We will be very active in coming year so please contact us if you have a great idea and excellent execution capability!

Looking forward to 2021

Again, we hope 2021 would treat the world better and become the year of hope for Indian startups. We are now in “wanna invest mode” and looking forward to meet a lot of new founders with strong conviction and passion. Also, almost all of our portfolio startups has shown significant growth and made many achievements in 2020. They are ready to raise subsequent funding and accelerate the growth. Let’s make more and more success together!

Happy Holidays!