Home Start-Up Whiteboard Capital mixes incubator, micro-VC approach

Whiteboard Capital mixes incubator, micro-VC approach

by Economic Times
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About a year before finalising the idea of starting an offline retail chain selling generic drugs, IIT-Bombay graduates Sidharth Gadia and Girish Agarwal opened an online community for Indian pharma retailers called Reap. The community targeted the massive segment of over 10 lakh pharmacies.

In early 2016, the two met Sandeep Tandon, a serial entrepreneur who had co-founded mobile recharge platform Freecharge with Kunal Shah. Freecharge had just become the biggest strategic sale in the Indian startup world, after being picked up by Snapdeal.

Tandon, who also manages his family business in healthcare technology and electronics manufacturing, was formalising his personal investments with Shah under a venture fund called Whiteboard Capital. He liked Gadia and Agarwal and wanted to back them.

As the user base of Reap grew, Tandon asked Gadia a question during one of their meetings: “Will your users cry if the product is not around anymore?”

That spurred Gadia to rethink the plans for his startup. “We figured out consumers’ problem more than retailers’,” he said.

He pivoted the business to Generico, which now has over 40 outlets in Mumbai and recently raised $14 million in a round led by venture firm Lightbox.

This deal somewhat defines the approach of Whiteboard Capital, as the name suggests, where the idea is to bet on founders even before their business plan is finalised and to help them refine their products, even if it means changing the model. The firm starts with investments of about Rs 2 crore, which can increase up to Rs 8 crore in follow-on rounds. All its investments, except one, have happened when the startup was not even two months old or not even incorporated.

“We are not doing it to be passive investors and then hope and pray that they will work. We are not momentum investors but more of inertia investors,” said Tandon, who also oversaw the sale of electronics manufacturing business Celetronix to NYSElisted Jabil Circuits, which has revenue of $25 billion, in 2006.

Whiteboard, which is registered under the guidelines of SEBI Alternative Investment Fund (AIF), has a Rs 100-crore corpus with contributions mostly by Tandon. He has a kept few early angel investments separate, which include some of the most valued startups in Southeast Asia like Go-Jek and Zilingo besides Razorpay and Spinny in India.

While Whiteboard was getting its AIF cl earanc e, Shah decided to join Sequoia as an advisor in 2017 and stopped making angel investments, moving on from Whiteboard. But Tandon and Shah, who has since then launched financial technology startup Cred, still make investments together.

When Shah exited in 2017, Tandon decided to rope in Anshu Prasher, who had worked as an early-stage investor at Innoven Capital and Saama Capital for over six years, to help formalise Whiteboard’s operations. The VC firm has built a portfolio of around 20 companies in two years.

Whiteboard is getting in the market when several micro-VC firms like Blume Ventures, India Quotient and Kae Capital, which started about a decade ago with a corpus of around Rs 100 crore, have raised larger pools for their latest funds of Rs 350 crore to Rs 400 crore. As these firms focus more on startups that are at Pre-Series A stage or are clearer about their product strategy, Whiteboard sees an opportunity to back entrepreneurs who have not crystallised their ideas yet.

Prasher, who joined as a partner in July 2018, said the idea was to work very closely with five to six startups at any given time while also making investments in high-profile ventures like Shah’s Cred and Citrus Pay co-founder Jitendra Gupta’s Amica Technologies. The latter firms don’t need much guidance. By working closely with founders, Whiteboard is looking to differentiate itself as a combination of incubator and an early-stage VC. For this, Whiteboard has also an operating team of three, who are also deputed to portfolio companies for months to work in areas like operations, data analytics, and technology.

“At the stage we come in, hiring people, and not capital, is the biggest problem,” said Prasher. He plans to add more members to the operating team. The profile of the new members will be similar to entrepreneurs in residence.

Some of the companies Whiteboard has been closely working with are social commerce platform Dealshare, premium innerwear brand Damensch, personalised celeb messaging platform Wysh and Generico. All these companies have managed to raise follow-on rounds from VCs, including Matrix Partners India, Falcon Edge, Omidyar and Lightbox Ventures.

This Whiteboard Capital mixes incubator, micro-VC approach was originally published on https://economictimes.indiatimes.com/small-biz/entrepreneurship/whiteboard-capital-mixes-incubator-micro-vc-approach/articleshow/72422851.cms

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