Value corrections, more scrutiny seen in startup funding: Euler Motors founder

In 2018, Saurav Kumar, an alumnus of Delhi College of Engineering and Cornell University, founded Euler Motors to foray into the automotive business which legacy players with deep pockets like Tatas and Mahindras have dominated.

The company launched its first product, an electric commercial three-wheeler, in 2021 at the height of the Covid pandemic.

In just around three years it has made significant inroads in the sector and raised over Rs 770 crore in funding from leading institutional investors including British International Investment, GIC Singapore, Blume Ventures and Piramal Alternatives.

In a freewheeling chat with DH’s Gyanendra Keshri, Kumar, who is also CEO of Euler Motors, talked about the company’s expansion plans and funding issues in the startups ecosystem.

Excerpts:  

Automotive industry is dominated by legacy players. What is the scope for startups in the sector?

When I started the company in 2018, my mission was that I am an engineer and have to give back to society. My education was sponsored by Sulabh International. Earning for yourself is one thing, but how you give back to society is important, especially if you have taken a scholarship.

This is why I came back from the US to India and built one startup Cube26. When it was acquired by Paytm in 2018, I was thinking what I can do for the country and especially air pollution. I truly believe that electric vehicles are an important solution.

I have followed it truly and passionately. At the end of the day we want to create some impact. Yes, automotive is capital intensive and the competition is huge. Over the last 7-8 years we have learnt a lot. I am very grateful that a lot of partners have helped us reach here.

Can you elaborate on the funds that you have raised?

In the last 7-8 years we have raised funds each year. We have raised around Rs 770 crore so far. There are both domestic investors and international investors. Multiple Indian partners have put in money like Blume Ventures and Piramal Alternatives and Havells Family Office (QRG Holdings). There are international investors like British International Investment, Green Frontier Capital and GIC Singapore.

Several startups are struggling to raise funds. How do you see the funding environment?

In the last two-three years there have been value corrections. There is definitely, I would say, a bit more scrutiny, it’s tougher to raise funds, it’s tougher to get those kinds of valuations. There are look outs for better companies. Investors are looking out for companies that have solid foundations and are on a good path to profitability, not just burning money here and there. I think if there is good company they are able to raise capital

You have raised substantial money even in the last two-three years also. How did you manage to do that?

Even during Covid and other funding winter environments we have managed to raise capital and we continue receiving interests. This is because our focus is on the person at the driver’s seat, making money for the dealer partner, financers and fleet owners. If you take care of them, then you will continue to get ecosystem support.  

What is the plan for new fund raising? When do you expect to become profitable?

This is a capital-intensive sector, so we would need to keep raising money for some time. We are on a very strong journey to become profitable very soon. We are working on that.

Does the trend indicate that investors are now looking at more tangible assets rather than funding say software or tech companies?

People have their own risk profile. Some people would like to invest in sectors like this (auto) where you have hard assets like factories, tools, vehicles etc. But there are investors who would invest in let’s just say software or digital play. So there are both classes of investors and we need all of them.