The success of Indian companies
such as Zoho, Freshdesk and Capillary at a global level has shown how lucrative the product space can be, and Ideaspring is looking to specifically target such firms. The fund will focus on companies
which proceed to the series A round in a span of 12-18 months, a period much longer than what business focused startups are allowed today.
Mohandas Pai, general partner at Ideaspring said that this time will be utilised by the startup to develop their product and get validation from customers. Moreover, the companies would not have to worry about aspects other than building their product during this time, with the Ideaspring team mentoring them on product management, customer management and design thinking for serving clients globally.
"In terms of Indian companies building products for global scale, we have no choice. However, the trend that we're seeing is that larger startups are buying software from smaller startups, so that change is coming and I'm so glad that we have some unicorns in India," added Doraswamy.
While product companies are seen to provide less returns than business or e-commerce companies, the investment required is also much smaller. Ideaspring has set Rs 3 crore as the benchmark for every seed investment it makes and plans to fund four to six startups a year. It will also help these startups connect with more institutional investors for their pre-series A and Series A investments, but says companies it invests in should begin showing intent to buy from customers after a year.
Ideaspring expects to receive Rs 90 crore of the targeted Rs 125 crore fund within a month, while the remainder will be closed four months down the line. While the fund has already selected a few companies, it declined to disclose which companies these were. Ideally, entrepreneurs with experience working in research arms of multinationals, Indian entrepreneurs returning from the US and people who have done academic research are potential investment targets for Ideaspring.
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