High-Stakes is a unique series that focuses on dissecting the investments of venture capital and private equity firms to gain insights into the portfolio of companies they’ve invested in, industries they focus on, and their investment process. In this edition of High-Stakes, we’ll be focusing on India Quotient.
India Quotient (IQ) is a venture capital firm that specialises in very early-stage investments. The Mumbai, India-based firm has 14 years of experience in this field and backs startups in consumer business areas such as fintech, edtech, social networking, logistics and healthcare.
Team
Key members of the team:
Prior to founding IQ, Anand was a partner at Seedfund, an early-stage VC firm known for its exits in Redbus and Carwale. He was also an angel investor in Rebel Foods, one of the largest cloud kitchens in the world. Anand co-founded an edtech company- Brainvisa Technologies, which he exited in 2005.
Currently, Anand is focused on raising funds from LPs, developing the portfolio, and driving and shaping the fund’s investment strategy.
The Indian Institute of Management (IIM) grad loves writing about startups, helping entrepreneurs and studying market opportunities.
Madhukar Sinha- Founding Partner
Madhukar is an agriculture engineer by training with a postgraduate degree from IIM-Lucknow. Before co-founding IQ, Madhukar was the Senior Investment Manager of Aavishkaar Microfinance and was a part of India’s microfinance revolution. He is the go-to man when it comes to law and regulations.
Gagan joined IQ in May 2017 and is popular among the Indian Institute of Technology, Bombay and Mumbai entrepreneur circles. He cofounded ThinkLABS in 2006, a robotics and science learning company to promote hands-on learning & STEM education. Gagan was also an active angel investor with investments in nearly 24 well-known startups, with five exits to date. The IIT-grad is excited about startups in the areas of consumer hardware, technology, and learning.
Analysis
A total of 97 investments across 63 startups have been considered for this analysis, and the analysis is based on data from Crunchbase. The startups included are those for which adequate information exists, and this is by no means an exhaustive list of all the investments made by IQ. The total funding raised indicates the total amount of funding raised by the startups from IQ and various other investors across the different rounds that IQ has participated in. The estimated revenue range was available for 40 startups, and the funding amount was available for 77 investments.
The startups have been classified according to various industries based on data from Pitchbook, and the sector classification is based on Global Industry Classification Standard (GICS). The sector classification is subjective and has been made considering the sector/industry that the startups closely resemble.
India Quotient’s investments span seven Indian states, with the southern state of Karnataka, home to Bangalore- the Silicon Valley of India, leading the pack. Karnataka has attracted slightly more than 55% of the funds or US$ 313 million, followed by the northern state of Gujarat with 20% or US$115 million and Maharashtra, home to the financial capital of India-Mumbai at the third place with 19% or US$ 106 million.
Almost half of the startups are around 5 years old or lesser as they were founded between 2016 and 2020, and around 46% were founded between 2010-2015, while the rest were founded between 2007 and 2009.
The lion’s share of the funds has gone towards the communication services sector, which has attracted around 51% of the funds or US$ 285 million. Prominent industries in this sector include social/platform software (US$ 264 million) and entertainment software (US$ 7 million). In terms of the number of startups, the communication services sector is ranked third with 17% of the total.
Founded in 2015 by the Indian Institute of Technology grads, ShareChat is a Bangalore, Karnataka based social networking and regional content platform. The app, which supports 15 Indian languages, has more than 100 million downloads on the Play Store. Earlier this year, ShareChat reported that over 750 million user-generated pieces of content were uploaded to its platform, with 24 billion Whatsapp shares in 2020. The app benefitted from the pandemic, with average daily user time on the platform increasing from 24 minutes pre-lockdown to 31 minutes post-lockdown.
Overall, ShareChat has raised more than US$ 262 million from India Quotient and other prominent investors across six funding rounds between 2015 and 2020.
Related Article
Founded in 2018, Kuku FM is a Mumbai, Maharashtra-based regional audio content platform. The platform has a variety of content, including audiobooks, courses, book summaries, podcasts and stories. The startup’s most recent funding round was a Series A round led by Vertex Ventures in Feb 2020, where it raised US$ 5.5 million.
In terms of the amount of funding, the financial sector is ranked second and has raked in 26% of the funds or US$ 148 million. But in terms of the number of startups, it’s a distant fourth with 11% of the total. Prominent industries in this sector include specialized finance (US$ 115 million) and financial software (US$ 28 million).
Lendingkart is an Ahmedabad, India-based online lending platform that provides working capital finance for small and medium enterprises. The fintech startup offers business loans, working capital loans, loans to micro, small & medium enterprises (MSME), and business loans for women. The startup uses technology and analytical tools to assess the creditworthiness of small businesses accurately and rapidly, thereby making it easier for them to access credit. Backed by the likes of Sistema Asia Capital and Fullerton Financial Holdings, Lendingkart has raised US$ 115 million across four funding rounds between 2016 and 2020.
Founded in 2016, LoanTap is an online lending platform that provides flexible loan products to salaried professionals. LoanTap’s products include personal loans, business loans and vehicle loans. The Mumbai, Maharashtra-based startup has raised around US$ 24 million from investors such as 3one4 Capital, Kae Capital, and Shunwei Capital.
The consumer staples sector is ranked third in terms of funding, raking in US$ 42 million or around 8% of the total. The information technology sector comes in fourth with 7% of the funds or US$ 38 million. The sector is home to 22% of the startups and is ranked second in terms of the number of startups behind the consumer discretionary sector, which is home to 24% of the startups.
Based in the city of Bangalore, Powerplay is a project management software that aims to simplify communication and collaboration for the construction industry. The Accel-backed startup has over 150k users and has helped more than 500 companies. Powerplay increases clarity through on-site updates and makes it easier to collaborate, thereby preventing rework and miscommunication. The one-of-a-kind startup has been built by experts who understand the nuances of construction projects in India. Powerplay’s most recent round of funding was in June 2021, where it raised US$ 5.2 million in seed funding.
Founded in 2017, BharatAgri is a farming technology platform that supports farmers by providing critical information at appropriate times and through regular monitoring. The services offered include crop advisory, water testing, weather-based advisory, and personalized crop calendar, among others. The Pune, Maharashtra-based firm has a staggering 46k+ acres under cultivation, supports 100+ crops, and is operational in more than 1,400 villages. The startup has raised close to US$ 3.2 million between 2019 and 2020.
Summary
A majority of the startups have remained private (67%), close to one-fourth of them have been acquired/merged, and around 10% of them have shut shop. India Quotient has made more than three-fourth of its investments in the past five years, while the rest have been made between 2010 and 2015. Being an early-stage VC firm, India Quotient has focused on seed-stage investments which accounted for 53% of the total number of investments, followed by Series A with 21%. In terms of the amount of investment, Series D reigns supreme with 31% of the total funds, followed by Series C with 23%. Overall, India Quotient has participated in rounds totalling US$ 563 million and has made 97 investments across 63 startups.
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