We avoid investing in startups without technological co-founders: Adith Podhar, founder of Gemba Capital
“Gemba” in Japanese means “the real workplace”. “In any organization, Gemba is where real value is added,” says Adith Podhar, founder of Gemba Capital, a early stage venture capital firm that supports post-seed startups that are scalable and growing. seeking angel investments. He talks to Sudhir Chowdhary about his company’s approach to investing in new businesses and trends in the SaaS ecosystem. Extracts:
How do micro VCs play an important role as catalysts for early stage startups?
In early-stage investment, capital is no longer a gap. The ability to help founders and add value every step of the way is a competitive advantage for micro VCs. Because of our thesis-led approach, at Gemba Capital we add value from the introductory call to the founder’s post-investment journey. A founder can be vulnerable to us and ask us any question at any time of the hour, we are like a friend of the founder more than an investor. We know the challenges a startup faces in the formative years, and peer learning helps guide them in the right direction.
Micro-VCs do not remove optionality checks; we went into each of our portfolio companies. The founders of start-ups have direct access to the general partners of a Micro VC fund. Areas we typically help with are advice on growth / strategy, business model, right KPIs, fundraising plans, hiring, client relations, investor relations, partnerships with suppliers. In many ways, a Micro VC Fund prepares the startup for the “Series A” early stage.
As a start-up venture capitalist, what is your approach to investing in new entrepreneurs?
We have entrepreneurs in our portfolio with work experience ranging from four to over 10 years and varying backgrounds. We invest in founding teams who have in-depth knowledge of the market and complementary skills to implement the vision. We generally avoid investing in startups without a technology co-founder. We have developed a proprietary Founder Market Fit Framework that we use to assess if this is the right team to support for “that” type of business.
We are an investor with strong conviction and we engage even before the lead investor of the round is in place.
What trend changes do you anticipate in the SaaS and Deep Tech ecosystem?
India’s SaaS industry is expected to generate revenues of $ 50-70 billion and gain 4-6% of the global SaaS market by 2030, creating up to $ 1 trillion in value, according to a report by SaaSBOOMi and McKinsey. We know that “Made in India” SaaS startups can win in Indian and global markets. The pandemic has accelerated the adoption of technology and remote working. Indian SMEs are looking to move from manual processes to digitizing all their workflows, collaboration and online transactions. As huge amounts of data are captured, CXOs seek advanced analysis tools for better decision making. Vertical SaaS is gaining momentum in industries where horizontal SaaS is unable to solve the deepest problems. SaaS-enabled marketplaces go vertical and create a software stack and marketplace on top of it.
How has your journey gone so far? How many companies have you invested in? What are your plans for the next five years?
We started Gemba Capital in early 2018 as a family office doing angel investing and then led a Gemba Capital syndicate on the angel investor list from 2020. It was a natural progression for us to launch a Micro fund. VC in 2021. We have always operated as a VC fund since day zero. We have invested in 31 startups since inception and some of the notable names are Plum and Verak in Insurtech; Sleeping cat (D2C); Grip, Wint Wealth and Strata (Fintech); Unnati Agri (Agritech); Crejo (Edtech); Finally, Zuper, Inai and Clickpost (SaaS).
On Fund I of $ 10 million, we are looking to invest in 24 companies primarily in SaaS, consumer tech, fintech and deep tech over the next 30 months with the first check of $ 250,000 and a rate reserve of about 35% for tracking The sleeves.