Technologies such as blockchain and artificial intelligence (AI) will have a disproportionately larger impact in India where access issues can be solved by decentralisation and automation, says Arpan Shah, Partner at Virtu Propdeal, a Kolkata-based fund focused on real estate and technology investments.
“We have invested in a few realestate projects from the early days of our fund. We invested in two ecommerce companies — CaptainKyso and Postergully, which exited. We are looking at early-stage companies that are keen to raise money at the seed or pre-seed stage,” he said.
Virtu Propdeal was started in 2012, initially with the idea of investing in real estate projects, especially in Tier 2 and Tier 3 cities. “Over time, we realised that our core team has diverse strong experiences that are especially well-suited to investing in early-stage companies in India,” he said.
When asked about startups, he said, “Similar to a lot of seed and pre-seed focussed investment companies, we focus heavily on the team and the experience of the founders. In particular, we are focussed on AI and FinTech startups, as well startups focussed on the next wave of internet users in India. We see this as an untapped opportunity in India.”
The startup ecosystem lacks significant experience in dealing with problems at scale. “As a result, we see a lot of entrepreneurs making mistakes with regards to hiring and scaling their organisation while remaining competitive. Often, we see companies hire too many people too quickly without thinking of building and scaling their technology and organisation to absorb large numbers of people without compromising the culture and speed of innovation. The ecosystem in the Bay area is stronger in this regard,” says Shah, who currently heads data engineering at FinTech company Robinhood, in the Bay Area.
When asked why startups are finding it hard to raise money, he said, “The startup ecosystem in India witnessed an initial hype and boom which saw a lot of inflated valuations and a lot of “me too” startups that tried to replicate models from more mature markets. Unfortunately, the Indian consumer and the Indian business are indeed unique in many ways and a lot of entrepreneurs aren’t focussed on these opportunities. VCs are looking to distinguish themselves, and ours for example see AI and FinTech as massive spaces in the coming decade for India.”
Focused on India, Virtu Propdeal hopes to add value to small companies that are looking for investment from dedicated investors.