Pune based Entrepreneur turned VC, Manish Kumar, CEO at IncuCapital, ‘early’ stage VC firm, On their investment philosophy, differentiators, and challenges.

As India’s start up sector moves with out of the box ideas, a Pune based VC firm gets ready to support them. Headed by two entrepreneurs, backed by a BSE listed private equity player, IncuCapital is all set to encourage fantastic ideas that will turn into profitable companies. In a tete-e-tete with Manish Kumar, Executive Director & CEO, IncuCapital, we understand how and why.What is IncuCapital's investment philosophy?

IncuCapital is a venture capital firm focused on early stage companies. We focus on supporting/aiding (support/aid are ambiguous enough – can be monetary/directional/backend whatever) any promising team building a product/service that has a good potential market. Though our funds are structured around specific investment themes, there are cases where the startup may not fit in the bill as far as the fund mandate is concerned but may still be fairly exciting to work with. Our Incubation function then ensures that we participate with such promising companies in helping them take shape and build it up to a stage where capital is a natural element required to grow. Our fund managers and other partners like angel groups may then independently (or collectively) consider the company for funding.

What motivated you to enter this space?

Surojit Nandy, Executive Director and COO, IncuCapital and I have been entrepreneurs and continue to run our individual companies. Having gone through the cycles, we realized that there are a lot of challenges that every start-up faces. Many of these are not necessarily regarding the product/service that they are building. A whole lot of them can be solved with strategic guidance, infrastructure and knowledge sharing. We believe in the power of entrepreneurship and are working to ensure that entrepreneurs get a better platform to build their companies. By helping them and participating with them early on, we can achieve a lot together.

Tell us about your background.

As mentioned earlier, we both have been entrepreneurs ourselves. IncuCapital is also promoted by IndiaCo Ventures Ltd., a BSE listed Private Equity firm. IndiaCo, which in its decade plus history, has been deeply involved with early stage companies through incubation and funding models. Since they moved on to the Private Equity space, they have lent their entire early stage lineage to IncuCapital.

Are there any specific sectors that excite you?We are sector agnostic in our approach. With Incubation and Funding core to our business model, we generally look for a bright idea backed by a good team. We participate only if we believe we can add significant value to the start-up.

Did you close any deals, yet?

Yes, we have. In the six months of our existence, we have been able to establish two institutional incubators. In fact, we are the only multi-incubator set-up in the country. On the start up front, we recently closed a deal for incubation. Currently we're actively working on 5 more such deals that are expected to be announced in the next 2-3 weeks.

How is IncuCapital different from the other early stage funds out there?

Funds are not really different; the point of difference lies in the approach of the fund manager. IncuCapital is focused on early stage start ups, so we will probably be the first investor in the enterprises we choose to work with. Thus, we are 'truly' early stage investors - not many funds may be able to say that though.

What are the traits that look in entrepreneurs, before you invest in them?

We prefer to work with entrepreneurs with experience backing them. We prefer teams with a good combination of skills that are critical to success along with a basic knowledge of running a company, like managing the P&L and the business environment, for example. Essentially, we look for the following traits: Competency & Capability, Business Idea & Space, Business Model

What is your take on the Pune startup ecosystem?

Pune, as a city, is evolving at a fast rate in every way and is now counted to be a very important commercial hub. Pune's start up ecosystem is keeping up with this pace of growth. We frequently hear of many interesting start up ideas in the circle. However, we have established our local chapters in six major cities in India to ensure that we are locally available for startups since inception is not limited to just one city. Pune is a great place to be in right now and is no more the ‘Pensioner’s City’!

What are the challenges one faces while setting up a VC fund?

We believe that the Indian Government needs to do a whole lot more to encourage investments in early stage vehicles. As an example, while mutual fund investments and other saving schemes are given tax incentives, VC fund investments entail only risk but no tax benefit. Also, it will be great to have a secondary market mechanism for early stage companies, if possible. This will help primary investors and VC Funds exit their investments and in turn encourage early stage investments.

We at YourStory will keep you posted about all the latest happenings at IncuCapital. Tell us what you think about this story by writing to us at [email protected]