Putting the Risk back into Risk Capital

It’s 2022 and we are still in our caves. We’re not only referring to covid-induced cloistering. We’re referring to the limitations in our ideas.

The Indian ecosystem looks back at 2021 in awe. We minted over 40 unicorns and boosted valuations to the stratosphere all while bringing grocery delivery down to a mere 10 minutes. Changes are in session, sure, but ‘disruption’ is a hyperbole. We are still playing with incremental changes. Perhaps long overdue for a market of our size, but characteristically gradual nonetheless. The fact is that we’re skirting around investing in fundamental change.

The big, fat, hairy problems of our times continue to loom over us. When can we transition from aggregating agri-marketplaces to transforming land productivity? How many more calorie counting nudges do we send before digging deeper into the genomics of our diabetes-prone population? And what will it take to move discussions from round table conferences to labs building next generation technology tackling climate change?

Don’t get us wrong. We’re excited by the wave of digitalization sweeping across India — we have and will continue to back entrepreneurs making it happen. But we’re looking for something more. We want to get beneath the surface to drive innovation that is deeper and more fundamental. To make that happen -

We need deep technology-based solutions for not only India-specific issues but problems that have an impact on the future of our species and our planet. We need entrepreneurs to step up to take their breakthrough technologies to the market. We need talent to perform with visionary leadership. And finally, we need capital to make it all work faster.

While the word ‘risk’ is loosely thrown around (with the word ‘reward’), we need to ask ourselves what risk we are truly taking on. Appetite for technological risk — especially technology that is disruptive — is low. Truly novel ideas don’t seem to resonate with the revenue-focused ethos of our ecosystem. Imagine deep tech commercialization as a half-baked cake. Eating it pre-maturely sets you up for unnecessary exposure to salmonella. In that sense, patience, expertise, and capital are all required to see through to the end from product development to go-to-market. However, given the reality of our ecosystem, deep tech entrepreneurs in India face extra hurdles. Some argue that perhaps deep tech is just not India’s forte.

We disagree. We see three emerging trends. First, genuinely disruptive solutions are being developed right here in India. There are world-class researchers and labs in academic as well as corporate settings working on antibiotics for superbugs and bioinformatics for next-gen seeds — projects that will permeate global value chains for the better. Second, cost-effective innovations from India have the potential to disrupt similar low-resource settings. While access to capital may limit inventions requiring $100 million, India’s frugal approach to innovation offers a pathway to effectively scale more efficiently. Finally, corporations in India and abroad are searching for considerable ingenuity to compete in an ever changing, interconnected global market.

At Ankur, we’ve got a reputation for making ‘hatke’ investments. In 2013, investing in agriculture was seen as fool’s play while waste gas fermentation with synthetic biology was unheard of, let alone worth investing in. We’ve taken bets that aren’t so mainstream. We’re not playing for nice-to-haves. We’re in it to back innovations that will disrupt the course of tomorrow. Our portfolio of companies have gone on to do more than we imagined. Now, we’re asking ourselves how we can take our technology diligence playbook to enable more entrepreneurs building out the deep tech ecosystem in India.

We’re kicking off 2022 with a renewed commitment to deep-science tech. We’re launching a new series called TechSprouts to dig into advanced technologies at the brink of commercial adoption. Join us as we discuss how battery chemistry, health-focused AI, and computational genomics are making the world fundamentally better. Through these conversations, we hope to foster deeper insights and more importantly — activate entrepreneurs and investors.

The technologies that will fundamentally change our world are constantly evolving. It’s time we put the ‘risk’ back in risk capital to deliver outsized returns on a better future.

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