Adith Podhar, Founder, Gemba Capital

“Gemba” in Japanese means the “real workplace”. “In any organisation, Gemba is where real value gets added,” says Adith Podhar, founder, Gemba Capital, an early-stage VC firm that backs post-seed stage startups that are scalable and looking for angel investments. He talks to Sudhir Chowdhary about his firm’s approach to investing in new ventures and trends in the SaaS ecosystem. Excerpts:

How are micro VCs playing a significant role as catalysts for early-stage startups?
In early-stage investing, capital is no longer a moat. The ability to help founders and add value at every step of their journey acts as a competitive advantage for micro VCs. Because of our thesis-led approach, we at Gemba Capital add value right from the introductory call to the post-investment journey of the founder. A founder can be vulnerable to us and ask us any question at any time of the hour, we are like a friend to the founder more than an investor. We know the challenges faced by a startup in the formative years and peer-based learning helps guide them in the right direction.

Micro VCs do not cut optionality checks; we are all-in in each of our portfolio companies. Founders of early-stage startups have direct access to the general partners of a Micro VC fund. Areas where we typically help are guidance on growth/strategy, business model, right KPIs, fundraising plans, hiring, customer connections, investor connections, vendor partnerships. In many ways, a Micro VC Fund makes the seed-stage startup ‘Series A’ ready.

As an early-stage VC firm, what is your approach to investing in new entrepreneurs?
We have entrepreneurs in our portfolio with work experience ranging from four to 10+ years and diverse backgrounds. We invest in founding teams that have deep insights into the market and complementary skill sets to execute the vision. We usually avoid investing in startups with no tech co-founder. We have developed a proprietary Founder Market Fit Framework which we use to assess whether it is the right team to back for “this” kind of business.

We are a high conviction thesis-led investor and commit even before the lead investor of the round is in place.

What evolving trends do you anticipate in the SaaS and deep tech ecosystem?
The Indian SaaS industry is projected to generate revenue of $50 billion to $70 billion and win 4%-6% of the global SaaS market by 2030, creating as much as $1 trillion in value, according to a report by SaaSBOOMi and McKinsey. We know that SaaS ‘Made in India’ startups can win in Indian and global markets. The pandemic has accelerated tech adoption and remote work. Indian SMBs are looking to shift from manual processes to digitalising all their workflows, collaborating, and transacting online. As massive amounts of data is getting captured, CXOs are looking for advanced analytics tools for better decision-making. Vertical SaaS is gaining momentum in industries wherein horizontal SaaS is unable to solve deeper pain points. SaaS-enabled marketplaces are going vertical and building software stack and marketplace on top of it.

How has been your journey so far? How many companies have you invested in? What are your plans for the next five years?
We started Gemba Capital in early 2018 as a family office making angel investments and then ran a Gemba Capital Syndicate on Angel List from 2020 onwards. It was a natural progression for us to launch a Micro VC fund in 2021. We always have operated like a VC fund from day zero. We have invested in 31 startups since inception and some of the notable names are Plum and Verak in Insurtech; Sleepycat (D2C); Grip, Wint Wealth and Strata (Fintech); Unnati Agri (Agritech); Crejo (Edtech); Finly, Zuper, Inai and Clickpost (SaaS).

From the $10-million Fund I, we are looking to invest in 24 companies mainly in SaaS, consumer tech, fintech, and deep tech in the next 30 months with the first cheque of $250K and ~35% reserve ratio for follow-on rounds.