International Finance Corporation (IFC), a member of the World Bank group, is the largest global development institution focussed exclusively on the private sector in developing countries. Ruchira Shukla, Regional Lead, South Asia, Venture Capital, IFC, spoke about the new fund’s investment plans. This includes investments in the range of $20-60 million in Indian start-ups and other venture funds as it believes that start-ups using technology to solve India’s problems has growth potential.
Q: What will be the focus areas for your fund?
A: Start-ups in the pre-seed, seed and pre-Series A stages are most in need of patient capital, technical knowhow and domestic and international partner linkages. However, these are the stages where the risk is highest and financing most scarce, underlining the need for strong fund managers, accelerators and incubators. The IFC Start-up Catalyst programme aims to support seed stage investment vehicles across several markets globally. We will provide funding and technical advisory services and leverage our global footprint to connect developed and developing ecosystems, facilitating best practices, ideas and opportunities globally.
Q: How many seed stage funds will you be supporting?
A: The IFC Start-up Catalyst programme is a facility through which we will invest in a portfolio of incubators, accelerators, seed funds and similar vehicles. We plan to invest in approximately 20 such investment vehicles with an average investment of $1-3 million.
Q: What do you look for in such seed stage funds?
A: We aim to select promising, impactful and sustainable seed stage investment vehicles through a standardised selection and evaluation process. The criteria includes track record and strength of the investment team, ability to raise the full capital amount required, existence of an active ecosystem to supply deal flow to the vehicle in its chosen areas of focus as well as the team’s experience in nurturing start-ups.
Q: So far you have been actively looking at several emerging technology areas around Artificial Intelligence (AI), Machine Learning (ML) and IoT? What is driving the increased focus in these areas?
A: Our global experience points out that technology driven innovation has proven to be impactful for local economies and their populations. We are seeing several examples of artificial intelligence and deep learning being used by start-ups to solve complex problems and hence disrupt traditional ways of doing business across sectors. Device connectivity can now be achieved at low cost and reasonably high speeds.
The use of connected devices has made it possible to extract data that had never been available thus far, and machine learning tools make it possible to process and analyse large data sets. This is enabling cost-effective, customised solutions to problems that were so far believed to be not solvable. And making such solutions available to mass market consumers and SMEs can drive broad based economic growth.
Q: Of late, we are seeing many examples of Indian entrepreneurs’ inability to sustain their business. Your comments.
A: I am actually quite impressed with the nature of technology innovation we are now seeing. Indian entrepreneurs are coming up with cutting edge solutions leveraging AI and machine learning to solve India specific problems or vertical focussed solutions with global applicability. India has been traditionally known for its IT services and now getting increasingly recognised for its product innovation.
Q: Have you identified your first seed stage fund investment in India? Can you share examples of other such funds you have invested in globally.
A: We undertook a thorough review of the wide range of early stage investment vehicles in the Indian market, mapping the space and shortlisting a few that we are currently tracking. We should be able to announce these investments as the deals get approved through our evaluation process. Some examples of our investments under this program include Flat6 Labs in Egypt, 500 Luchadores in Mexico, NXTP Labs in Latin America and Jungle Seedplus in South East Asia.
Source: The Hindu Business Line
