Incubate Fund Asia in 2023
Happy New Year! Hope you have enjoyed a great holiday season with your loved ones. Thank you very much for everyone supported us and journeyed together with us in 2023.
Like many other people in the startup ecosystem, 2023 was a year of “re” for Incubate Fund Asia and its portfolio startups. We rebranded ourselves from Incubate Fund India to Incubate Fund Asia and recruited new members. We have restarted organising some offline events. Many of our portfolio startups recovered from the pandemic loss, restarted its strong top-line growth, and reached EBITDA profitability. Some regulation changes, such as in fin-tech space, impacted our portfolio startups but they recognised those changes as opportunities and regained market shares. We have realised some good returns to our LPs as well.
Now we feel the startup ecosystem, especially in India, is coming back strongly and more sustainably from the pandemic. We wish all the ecosystem players including investors, LPs, advisors, counsels, government officials, and of course, entrepreneurs, a fruitful year ahead. Let’s make the year of 2024 a fun and bright one together in India and SEA!
I wrote down a few highlights of Incubate Fund Asia in 2023 so please spend a few minutes to be updated on us!
Existing Portfolio: Strong growth and Profitability Path
The most of our portfolio startups have grown massively in 2023 while many of them such as Captain Fresh, Nimble Wireless, Yulu, Plum, ShopKirana, BuyEazzy have already reached or are reaching in a couple of months to EBITDA profitability. Here are some examples.
Captain Fresh, leading Indian seafood supply chain startup, marked more than 2x revenue growth in 2023 while reaching to EBITDA breakeven very soon. It started international expansion about 1 year ago, Captain Fresh currently has 70% of revenues coming from abroad and it exports seafood to clients in about 30 countries. Captain Fresh secured $20 million in Series C extension round led by SBI Investment and Evolvence Capital to boost further global expansion. It also appointed Basola Valles, an ex-Amazon executive, as CEO of Europe operation.
Yulu, India’s No.1 EV two-wheeler sharing platform, marked more than 7x revenue growth in 2023 while reaching to EBITDA breakeven very soon. More than 200K new users used Yulu every quarter and 20 million kms travelled monthly on Yulu (B2C). Over 200,000 deliveries done daily on Yulu DeX (B2B). More than 202 Million gms of Co2 saved twice weekly. Yulu secured $9 million from the US International Development Finance Corporation (DFC) and total funding reached more than $105 million.
Nimble Wireless, a pet related IoT product startup, already reached very high EBITDA profitability and free cash-flow status while marking about 1.5x revenue growth in 2023. The startup is headquartered in Coimbatore which is an Indian tier-2 city but generating the most of its revenues from the US; it clearly shows how “make in India, sell global” story can work not only in software but also in hardware startups.
BuyEazzy, building beauty destination for bharat through neighborhood micro-preneurs, marked more than 10x revenue growth in 2023 while keeping Contribution Margin 3 (CM3) positive and reaching to EBITDA breakeven by March 2024.
Plum, leading employee health insurance and digital healthcare platform in India, marked more than 2.5x revenue growth while reaching to EBITDA breakeven soon. Plum is serving about 4,500 companies and have insured about 600,000 people. Plum is awarded as “The Best Insurtech Startup” at Global Fintech Fest 2023 and Abhishek Poddar (co-founder) was selected to “40 best leaders under 40” by The Economic Times.
ShopKirana, leading FMCG supply chain startup in India, marked about 2x revenue growth in 2023 and projects $125 million revenue in FY March 2024 while expecting to reach city-level EBITDA profitability by June 2024. ShopKirana’s private food brand, KisanKirana, now accounts for 10% of overall business and it is highly profitable already. ShopKirana also started credit business (fin-tech) by partnering with local financial institutions and have applied for NBFC license as well.
New Portfolio: Good B2B and B2C mix
We welcomed 2 new startups to our portfolio community and also committed 3 more new investments which we expect to close in January 2024. You can see how we are trying to balance the number of new investments between B2B and B2C - 2 in B2B and 3 in B2C.
GreenFortune (AndesInfra): GreenFortune is a Window and door systems brand startup which is not only providing sustainable construction materials but also empowers fabricators by providing holistic support through the lead conversion, order execution and warranty process. The founder of the startup, Dilip Kumar, is formerly a partner at Boston Consulting Group. It marked more than 4x revenue growth in 2023 while keeping high profitability. Incubate Fund Asia led seed round of GreenFortune along with Titan Capital, Partners Fund, and some angel investors.
Stealth (B2B Supply Chain): We have invested in a startup in textile B2B supply chain startup at pre-seed round. We may announce the investment soon.
We have committed 3 more investments and they are in businesses of 1) QSR (quick service restaurant), 2) Agri/Cattle Finance, and 3) Kids/Baby Wear D2C brand. We expects all of those investments will be closed in Jan-Feb 2024 so stay tuned.
Exit: Hats-Off to Founders’ Never-Give-Up Mindset
We made one exit through M&A in 2023 - Tripeur was acquired by Navan (formerly TripActions). Since we invested in the startup 5 years ago, we experienced a lot of things together with founders— especially because they are in the biz-travel space which was heavily impacted by the pandemic. I, as a venture capitalist, personally learnt many things from the journey. When the pandemic hit India, Tripeur’s monthly GMV/revenue suddenly became negative. We made a series of tough decisions such as firing 90%+ employees together. When a very undervaluing acquisition offer came in, we discussed a lot and we delivered a message of “Tripeur is not wrong, the founders are not wrong, the product is not wrong, this situation is simply because of the pandemic. This is the time to focus only on the survival. Once the pandemic is over, the market will come back sooner or later. Then you guys will be in a better position and win. We trust the founders. So let’s just survive.” and we actually made a small bridge finance round internally. Actually, after the pandemic, Tripeur has shown a remarkable growth and quickly recovered to much higher revenue/GMV than pre-COVID time while making higher profitability. I personally hats off to co-founders, Thia and Sajit, for their never-give-up mindset which is the most important thing in every entrepreneurs.
New Fund Launch: Two New Initiatives
We have launched 2 new funds in 2023 - one is for seed investments and sector agnostic (Incubate Fund Asia 3), the other is for growth investments and fin-tech focus (SMBC Asia Rising Fund).
Incubate Fund Asia 3
We have launched our 3rd flagship fund with a target corpus of $50M and made the first close. We are expecting to make the final close by April 2024. As same as previous 2 funds (Incubate Fund India 1 & 2), this fund will be sector agnostic and focus in seed-stage investments as a lead investor of the rounds. Only one change from the previous funds is that we will allocate small portion of the fund to investments in SouthEast Asia especially in Indonesia. Since we are starting investments in SEA as well, we have rebranded ourselves as Incubate Fund Asia. We expect the first investment in Indonesia will happen soon in the first quarter of 2024.
For previous 2 funds, our LPs are predominantly Japanese investors including FoF, corporates, and family offices. From our 3rd fund, we are welcoming more international LPs such as investors from Singapore, Middle East, the US, etc so we traveled a lot globally in 2023 (and it may continue in 2024).
Also, we have re-started some portfolio events whch we suspended during the pandemic. One of the most insightful one was IF India Supply-Chain Portfolio Gathering. We invited founders of supply chain related startups in our portfolio and had an intensive and interactive session on organization, hiring, supply-chain development, funding, etc. Utham and Sumit who are our growth stage portfolio founders (Captain Fresh and Shopkirana respectively) made very interesting lectures. We are planning to have more of such small theme/sector specific portfolio sessions and also a big annual portfolio summit in 2024.
SMBC Asia Rising Fund
In May 2023, we have launched $200 million fund together with Sumitomo Mitsui Banking Corporation (SMBC) which is one of the largest financial institutions in Japan. This fund is focusing on growth stage fin-tech startups in India + SouthEast Asia and cheque size would be between $5M to $15M. Since this is a corporate venture capital in nature, we will invest in startups which can potentially collaborate with SMBC and its multi-franchise partners such as SMICC (formerly Fullerton India) in India, BTPN in Indonesia, RCBC in Phillipines, and VPBank in Vietnam. We are about to invest in 2 startups from this fund - one in India and the other in Indonesia.
To officially launch this fund in India, we invited about 80 curated ecosystem leaders including VCs, IBs, Corporates, Startups, and regulators and had a small event in Mumbai.
During Singapore Fintech Festival, we have invited VC partners and fintech founders in SouthEast Asia region and had a closed-door session together with SMBC’s top executives and its multi franchise partners.
Team: Partner Promotion and New Member Addition
In 2023, we have promoted 2 Principals to Partners and also added 2 investment associates to our team. Congrats to new partners and welcome to newly joined associates!
New Partners
Rajeev Ranka, an Indian Institute of Technology (IIT) Bombay graduate, joined Incubate Fund’s India team in early 2020 as a Principal and has been leading all the aspects of investments in India — from sourcing to the value-up activities of the portfolio startups. Rajeev is based in Mumbai and will keep continue leading India investments for the fund.
Dave Kwong joined Incubate Fund in 2016 (even before myself!) and has been playing many important roles in the firm, including fund raising and investments in SEA region. Dave is based in Singapore but frequently visiting Jakarta. He will lead SouthEast Asia investments for the fund.
New Associates
Alok Anand Patra, IIT Kharagpur and Indian School of Business (ISB) MBA graduate, joined Incubate Fund Asia’s India investment team as an associate in May. Previously, Alok was working at Indian FMCG giant ITC in its Foods Business Division and experienced a startup-like culture by building the B Natural Juices and Sunfeast milkshakes category in India. At Incubate Fund Asia, Alok will be in charge of seed investments. Alok is based in Bangalore.
Rohit Sar, IIT Kharagpur graduate, joined Incubate Fund Asia’s India investment team as an associate in September. Prior to joining Incubate Fund Asia, Rohit worked on healthcare investments at Lightrock, the world’s largest impact focussed venture capital firm. Prior to entering the investment ecosystem in India, Rohit worked in a series of operating roles at Abbott Laboratories and Procter & Gamble. At Incubate Fund Asia, Rohit will be in charge of fin-tech growth investments for SMBC Asia Rising Fund. Rohit is based in Bangalore.
In 2024, Incubate Fund Asia will be…
We will make the final close of our 3rd fund in the first half and will be super active in new investments both for seed and fin-tech growth investments. So, if you have an interesting business idea, let’s have a chat over a chai or coffee.
We may keep organising some offline events both in India and Southeast Asia. Also we have now full-time presence in multiple cities — Bangalore, Mumbai, Singapore, and Jakarta. So if you are in town, please ping us. Let’s meet and exchange notes. We are more than happy to chat with investors, founders, LPs, advisors, counsels, government officials, and any other startup ecosystem players.
We strongly believe the year of 2024 will be an intersting and furitful year for startup ecosystem in India and SEA so let’s collaborate, and make more success together!
Onwards and upwards.
Nao Murakami - 2024/01/02
