Interview with Vikram Gupta, Founder of IvyCap Ventures, an INR 200 Crore Fund


A fund needs to be pretty bold when it holds on to a firm stance that it'll invest primarily in entrepreneurs coming from premier institutes. And that is exactly where IvyCap Ventures positions itself. Founded by Vikram Gupta, ex-COO of India Venture Advisors, IvyCap Ventures works on an investment philosophy to invest in early to growth stage startups founded by entrepreneurs mainly from IITs and IIMs. Apart from Vikram who is also the Management Partner, Ashish Wadhwani (Managing Partner) and Norbert Fernandes (Co-founder & Principal) all of who are IIT alums, form the core team at IvyCap.

The team also consists of a 15-member board of mentors including Avendus Capital co-founder and CEO Ranu Vohra, Raman Venkatesh, Senior Vice President of Eureka Forbes, Pramod Maheshwari, founder of Career Point and Anu Acharya, founder of Ocimum Biosolutions and Ajay Phatak, VP of Symphony Services.

We at caught up with Vikram Gupta, to dig deeper into the concept of IvyCap and what they have in store. Here are excerpts from our conversation:

Tell us more about the concept of IvyCap. Why the focus on IIT and IIM alums?

I’ve been in the investing world for quite some time. In all the investment calls I’ve made, I asked myself, “Who is the entrepreneur?” What I found is that in most cases when the entrepreneur comes from a premium institute like an IIT or IIM, the value creation in such investments is much higher. We also conducted a survey, featured in Economic Times, which resulted in the following findings:

-   Out of a total of 200000 IITians, 35000 have been in entrepreneurial roles at some point

-   20000 are still entrepreneurs

-   13000 companies were created by them

-   400 have already gone public

-   In a 7 year period from 2004 to 2011, 33% of those companies that had Venture Capital backed exits were founded either by an IITian or an IIM graduate. 40% of such VC backed companies that went public were also founded by people with such backgrounds.

Apart from these facts, what I feel is that Venture Capital and funds is only part of it. What’s more important is identifying and connecting with entrepreneurs, the value creation and also the trust factor that comes in. So, when you have that alma mater connect, there’s already a comfort factor, and a trusted support system.

Also, some challenges that we face as VCs include how to bring in more resources? What will be the incentive for mentors? This also factors in those challenges. At IvyCap we have a "Give Back" program where we share part of our own profits with the educational system of the country, primarily to encourage further entrepreneurship. Under this program, 5% of the Fund's total profit will be contributed from the share of IvyCap's profits to the respective Alma Maters (or institution of the choice) of the investors in proportion to their contribution to the fund, for promoting further entrepreneurship.

What are the sectors you focus on?

Although largely sector agnostic, we do have a greater focus on Healthcare & Lifesciences, Energy, Clean Tech and Edu-tech mostly because of the background and experience of the team. We also make sure to not invest in sectors like real estate that are asset-heavy.

What is your typical investment size?

The fund named IvyCap Ventures Trust Fund – I, is a 200 crore fund. Our investment size varies from INR 5 crores to about INR 25-30 crores. The average value is perhaps INR 15-20 crores.

Are you already in talks with entrepreneurs? How many deals do you plan to close this year?

We have closed our first deal and will be announcing it shortly. We’re looking at one deal per quarter so that amounts to four in a year.

What opportunity areas do you see in the sectors you mentioned earlier?

There are a lot of opportunities in HealthCare and LifeSciences. It is a sector that is booming and one which is believed to be recession-proof. There are challenges and growth opportunities at the same time. So it is still shaping up and it will undergo standardization. Energy and Clean Tech also have similar challenges. If you look at Tech, it has a very different set of challenges. What we do is a thorough evaluation of the potential of the startup to scale in that sector. We also focus on light businesses that are not infrastructure-heavy, like Healthcare-IT.

What are the factors that you look at while evaluating a startup?

Before we meet the entrepreneurs, we look at a few things:

1.   Entrepreneurs’ backgrounds - people ask us why IITs and IIMs? To them we say, we believe that anyone who has passed an exam such as the JEE has a disciplined approach, is hardworking, focused and dedicated. These are important factors.

2.   Risk-taking ability

3.   Ability to seek mentorship and leverage support

Once these factors are met, we start evaluating these entrepreneurs further. The investments could take anywhere between 1 month to 1 year.

More on IvyCap ventures, here.

- With inputs from Jubin Mehta