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Todays E paper
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Saturday 23 Jun 2018 03.42 PM

Creating a Billion Dollar Deep Tech Portfolio


• Macro-economic tailwinds enabling Deep-Tech growth

– There is a significant shift in the export basket of India. Services are an increasing share in Exports

– Within Services, Technology, especially High-Tech has been increasing, unlike developed economies (US)

– Deep-Tech offers an opportunity to reach 20% from current 7% share of Exports. Just as IT as a Service outgrew expectations; vision: Rs.10,000Cr in 2000, actual ~Rs.25,000Cr (2x, $5.7Bn) in less than 12 years

– US has seen significant investment traction followed by high-value exits which have showcased a path of success for other countries to follow. 46% of the NASDAQ market cap is led by Tech companies vs. 13% on NSE in India

– Divergence of global tech talent pool away from US - given reduced H1B grants, and the consistent funding of B2B & Deep Tech in the Indian Start-up landscape, it is set with the right factors of growth in place; Path for India as a Product Nation

• Enablement with Funding

– India’s funding environment is the 3rd largest Start-up ecosystem in the world. B2B Start-ups receive consistent funding support

– Programs like Electronic Development Fund (EDF), Start-up Fund of Funds, and other funds like Defence, Bio-Tech in action seeding initial capital to trigger India as a Product Nation

– In 2017 1000+ Start-ups were incubated of which ~50% were B2B Tech start-ups. Deep-Tech being ~5% of the total funded companies in 2017

– Business results have been encouraging: Deep-Tech start-ups grew at a 5-year CAGR of 30%; higher than 13% of B2C (e-commerce led businesses). Artificial intelligence alone grew up to 75%

• While India and its Deep-Tech Entrepreneurs do build global businesses the requirement of Capital is of a different nature

– The need for funding is not just Venture Capital but Nurture Capital

– Ecosystem for AI/ SaaS is stronger, however, IoT, Robotics, Drones require specialist attention for ‘Design to Manufacturing’.

– Indian entrepreneurs are first-time entrepreneurs who rarely have successful entrepreneurs as mentors

– YourNest has introduced the ‘EIR’ program to nurture their entrepreneurial journey

• YourNest portfolios of Fund I & Fund II are aligned with this trend and intent of enabling disruptors; fund performance is on-track.

– 65% of the deal-flow is for the B2B business models in the second fund at YourNest

– 34% of the deals seeking funding are from both B2B and the Deep-Tech Start-ups

– In our Deep-Tech portfolio, 40% of FY18 revenues are from outside India with a CAGR of 120% (2016-2018)

– Portfolio of 19 Companies with multiple up-rounds in 13 companies

– YourNest Angel Fund has featured in the Top 10 funds in India in the ‘Rankings by Returns’ in the Preqin’s ranking across Sectors and Vintage

Summary and Conclusion

We have all been witnesses to accelerated growth of IT Services businesses. At the vanguard of this tech Start-up ecosystem, a niche group of Deep Tech entrepreneurs are creating new solutions based on disruptive technologies that they have developed with cutting edge innovation. India is poised to emerge as an export hub of Deep Tech products/ services, rising as the next big wave. Nurture Capital will aid this reality.

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Saturday 23 Jun 2018 03.42 PM