Focusing on Bharat’s IP driven start-ups

Ashwin Raguraman, Venture Partner at Bharat Innovation Fund, talks to us about what it takes for him to say yes or no to a deal and about the future of the venture capital ecosystem in India.

Ashwin Raguraman, Venture Partner, Bharat Innovation Fund

Ashwin Raguraman, the man behind Bharat Innovation Fund, has a keen eye for identifying early-stage Intellectual Property (IP) driven start-ups. While identifying such companies does excite him, the fact that he meets people smarter than him is what he considers a bigger boon.  “You are dealing with people who are cracking real world challenges. The number of ideas that get generated and get executed is higher than the number of ideas that you can think through,” he says with genuine humbleness. He believes that the best thing one can do is to be a sounding board to them and be a part of the organisation and watch it grow.

He is implementing this philosophy in his current role as the Venture Partner of Bharat Innovation Fund, an early-stage fund backed by IIM Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship (CIIE) which had earlier set up Infuse Ventures, the country’s first clean-tech focused venture capital fund. Here, Raghuraman’s focus is to look for opportunities, more specifically innovations, in the cleantech, healthcare and digital technology space. Before setting up Bharat Innovation Fund, in 2010, he was instrumental in starting India Innovation Fund, promoted by NASSCOM and IKP Knowledge Park, which invested in early stage IP driven start-ups in both healthcare and digital technology.

In this story, he talks to us about what it takes for him to say yes or no to a deal and more importantly and some interesting encounters. He also talks about the future of the VC / PE ecosystem and some yet-to-be hot sectors.

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In addition to the usual suspects of a great team/big problem/large market – what makes you say yes to a deal? What makes you say no?

One, like you said, is a great team, product and market and each of these differ on the risk parameter based on the sector in which they operate.

The second part of the investment is based on a leap of faith. We meet great teams that have great market opportunity and great technology. When you are investing in their early stage, operational track record is not sufficient to identify the next scale up level. So, you have to take a leap of faith on the fact that the team which has built something so far will be able to take it to the next level. Very often, these are market makers. Hence, there is a lot of subjective judgement and gut feel. Some of the things that contribute to this are the ability of the promoter to identify his/her company’s strengths, have a strong execution plan and clear target market.

While start-ups often have great products, they don’t know if they are going to succeed in the market, as you can pilot them only to a certain extent. However, the entrepreneur who has analysed the market well and understood competition will be able to explain his growth approach to us. Every startup goes through difficult phases and it is easier to counter it if the entrepreneur understands what these challenges could be and have a plan of action to address it. Easier said than done as the minute you have all of these in place, you will be hit by a new set of challenges that you never predicted. All these factors help in nudging our decision in his or her favour.

We look for people who are globally competitive as we are investing in the IP driven space. Hence, knowledge of the global competition is another important factor. If the promoter isn’t aware of this, then for an investor to know more than him/her is not possible. If the promoter is telling us something we don’t know, then there is some learning for us. This apart, you respect the entrepreneur more.

When it’s a multi-entrepreneur team, it is important that they all sing the same tune – that is, they all need to be in sync with each other and their chemistry has to be right.

We usually say no to a deal if there isn’t scope for scaling up the business, no differentiated technology or if the team is lacking.

Narrate the time you got lucky as an investor

If you end up having  decently performing companies in your portfolio, you are lucky! For instance, I met Sedemac Mechatronics’ (the company focuses on controls for small engines and powertrains) founder when they were just out of the incubator from IIT, Bombay. We had just set up India Innovation fund and I found Sedemac’s business extremely interesting. A lot of why I was able to understand his solution was because I had  worked on marine diesel engines in my first job. However, the founder, after explaining their business to me, said that they had funds at that point of time and were not in the look-out for more.  After 3 to 4 months, they approached us (perhaps something from my introduction to them about our fund convinced him about the value that we will add to them) and we invested in the company. They have since then done very well, scaled up and also raised follow-on funding. While this cannot be defined as luck, I thought we would not be a part of this company but it happened.

Comment on the PE/VC ecosystem in India 10 years from now

It is coming under a lot of stress in many ways. Like the traffic situation, roads will grow and infrastructure will get better but it never keeps up with the pace of traffic. Similarly, we will have risk capital which will grow but not enough to keep pace with number of start-ups that are good enough to absorb it.

There has to some amount of democratisation of risk capital process and we are seeing that with angel investment and that will change the way people look at the overall investment cycle.

There is scope for VCs to innovate as well and come out with models that could be different. This is beginning to happen in the West and the change may be led by them. We will adopt those models, and possibly arrive at some new models of allocating risk capital.

What are the “yet-to-be-hot” sectors?

There is a whole data explosion and people have been talking about big data for many years now. What really happens is that you start with data capture , get it in good shape and then analyse that data. After this will be how to use the analysed data and initiate the next best action. There has been a substantial increase in the amount of data that is being generated and with Internet of Things (IoT) it is going to only increase. And hence, there will be automation at every level of the process. The last part of the process,the next best action, is where artificial intelligence (AI) comes in.  AI has to be converted to action, through some amount of robotics or automated process.  Moreover, there will be automation right across the data continuum, starting from capture, culminating in AI or some action which will happen in an automated fashion. Right along this continuum, there will be interesting startups.

Another area where there will be new disruptive solutions is personalisation, which fits well with automation and AI.

I also believe there is a lot of scope for a paradigm shift in the healthcare space. Your illness is a function of your building blocks and we haven’t even scratched the surface here. There are already solutions that involve personalisation – like Mitra Biotech for instance. Some of that is going to play out over the next few years. These are not new topics but are those where entrepreneurs have just managed to scratch the surface. People have been talking about these a lot, but the outcomes have been low for the hype that is present.

On Early-Stage Investing

“When you are investing in their early stage, operational track record is not available to identify their ability to  scale up. So, you have to take a leap of faith on the fact that the team which has built something so far will be able to take it to the next level.”

(This article was published in Beyond Basics, property of Wealth Advisors, a full-service investment solutions firm. To read more go to

Poornima Kavlekar has been associated with The Smart CEO since the time of launch and is the Consulting Editor of the magazine. She has been writing for almost 20 years on a cross section of topics including stocks and personal finance and now, on entrepreneurship and growth enterprises. She is a trained Yoga Teacher, an avid endurance Cyclist and a Veena player.

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