Axilor Ventures had started out with the goal of funding 20 early stage startups a year. More than one-and-a-half years later, however, the venture capital accelerator has invested only in 10 startups. The slow pace of funding was on account of high valuations in the Indian startup ecosystem till early this year, says Kris Gopalakrishnan, one of the co-founders of the firm, and also, a co-founder of Infosys Ltd. He is hopeful that with valuations getting rationalized, Axilor's investments will pick up steam from now on.
After retiring from Infosys, Gopalakrishnan became an active angel investor and mentor for startups in the country. He has, so far, invested in 30 startups and is also the chief mentor for Startup Village in Kochi, which was launched as the first technology business incubation centre under public private partnership in the country in 2012 while he also heads the startup council at the Confederation of Indian Industry.
In a conversation with VCCircle, Gopalakrishnan speaks of his investment approach, plans for Axilor Ventures and his views on the emerging startup ecosystems across the country. Edited excerpts:
You are one of the earliest startup evangelists in India. How are you finding the startup ecosystem shaping up in the country?
I strongly believe India needs thousands of startups because we need to create 20-30 million jobs every year. And I believe the only way we can achieve this is through formation of new businesses. We need not just tech startups, we need mom-and-pop shops, too. They may not scale up like technology startups but we need large number of such businesses to be created. Likewise, we need not just urban startups, we need rural startups, too. That is going to be even more challenging. There is no ecosystem in rural areas. It is a big challenge.
These days we see a definite slowdown in funding and markdowns happening in big ecommerce firms. What is your view on this?
This is part of being in the market and part of being startups. External environment will keep changing. Sometimes it may have nothing to do with you. Being a startup, you need to face this and move on. Today, may be it is slightly difficult to get institutional funding but it will change.
You are an active angel investor yourself. Can you tell us about your portfolio?
My primary vehicle for investment is Axilor Ventures. That is where I spend significant amount of time. I work with certain funds like IDG and GrowthStory. I don’t lead investments there but I do co-investments with them. When I get an investment opportunity and it is in the area of interest of mine and if I can add value to it, I will look at it. I may not invest in many of them. The overall number of startups I have invested in would be around 30.
What are your sector priorities and what is the ticket size of your investments?
Sector priority is there because I am from technology industry and that is an area I have an understanding and knowledge about. So typically I prefer technology or technology-led startups. Technology has to be the primary driver of such startups. (As for the size of investments), there is no fixed amount. I am part of Indian Angel Network. There the investments are between Rs 5 lakh and Rs 10 lakh. And I have made investments which are several crores also. It can vary from case to case.
Axilor Ventures' initial goal was to invest in 20 startups a year. It seems it is a little behind that goal.
We are learning. Of course, you have to start with a goal and an objective. We have made about 10 investments now. We are constantly looking at areas to improve. We thought we would make a lot more investments in the range of Rs 25 lakh but that part of the portfolio is missing because of higher valuations. Now, we can make a lot more of Rs 25 lakh investments.
You have been a mentor for Startup Village in Kochi and a similar initiative in Vishakapatnam. You head the CII startup council. What is your view of the initiatives around building startup ecosystems in various parts of the country?
Certain areas and certain cities have very vibrant ecosystems. The National Capital Region, Bangalore and Pune are examples of that. Then there are other regions which can benefit from some support. Kochi is one and Visak hapatnam is another one where with little bit of support we can start building an ecosystem. The goal for both these places is to build student startup ecosystems. I am confident that they can do that provided the government, too, supports. And in Kochi, we have definitely done that. In tier 2 cities like Coimbatore and Madurai, we can build ecosystems with support from local industrialists and local business community. They are fulltime there. They can provide some angel funding, support and mentoring that is required. It is very difficult to do that remotely. All you can do is to visit once in three months or six months which we do. I see an ecosystem emerging in Coimbatore, Salem and places like that. This is a continuous process and we need to propagate this to more and more places including rural areas.
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