Geeta Manjunath turned entrepreneur in the backdrop of a tragedy. In 2017, a cousin she was really close to succumbed to breast cancer at a relatively young age. Breast cancer is the most commonly occurring cancer in women and the second most common worldwide.
Gopinath, who has a PhD in computer science from the Indian Institute of Science, applied her scientific mind to the issue. Ubiquitous screening and early detection vastly reduces fatality from cancer. Gopinath had been part of the team that built India’s first supercomputer, and most recently headed data analytics at Bengaluru’s Xerox Research Centre and worked in various roles at Hewlett Packard Labs for 16 years.
Her venture, Niramai, has over the past three years notched up eight US patents as it has gone about developing a revolutionary method of targeting this ailment. Its technology uses a combination of a high-resolution thermal sensing device, machine learning and artificial intelligence to detect breast cancer more accurately and early [by scanning women below the age of 45, for example, too young for conventional mammograms]. It is hoping to disrupt the market with its high-tech solution developed entirely in India.
Niramai — which raised some $6 million in funding from Pi Ventures, Axilor Ventures and Flipkart cofounder Binny Bansal in November 2018 — has installed its products in some 20 hospitals and plans to ramp this up to at least 50 by the end of the year. Manjunath says some 6,000 tests have already been administered and several unexpected cases detected. “We have built a unique use case for using cutting-edge technology to vastly improve breast cancer detection,” she says.
Manjunath’s venture is part of an emerging breed of startups that distinguish themselves with proprietary high technology that they apply to solve very specific problems. Known by the wide-cast moniker deep-tech startups, these firms are typically staffed by elite scientists and technologists, possess deep scientific expertise in a range of fields and are prized by investors because rivals can’t compete with such startups by outspending them. Patented technology, it turns out, is a terrific competitive moat in the startup world.
While all startups these days involve some technology, most companies that we think of when we think of startups, are real-world operations enabled by a layer of technology, typically web applications and computer code. With deep-tech startups, it could be expertise in areas such as space, imaging, data analytics, materials, and others. And because the boundaries of science are global, if you manage to push that envelope, it also typically means you have a product that could work anywhere in the world. Sure enough, many Indian deep-tech startups are developing products for the world.
It is still an emerging story, but if it hits its stride, this could well be the third wave in India’s now four-decade-long tryst with homegrown tech companies and startups. The first was when the legendary IT services and BPO giants were built, starting in the 1980s. Second was the wave of Flipkart-led consumer-focused
ventures that exploited India’s massive domestic market that started transacting online. The next could well be a slew of companies with deep scientific expertise developing solutions for the world, out of India. The ingredients are available. But can we get the mix right? Ventures such as Niramai, Sig-Tuple, Agnikul, Scapic and Alphaics, are developing tech-centric products, tools and solutions from their India labs. Often these startups are founded by engineers or leaders who have worked with R&D units of global tech companies in India and have experience dealing with global audiences, or they have sprung from the labs and innovation hubs of India’s top academic institutes.
For instance, Dipanjan Gope, an assistant professor at Bengaluru’s Indian Institute of Science, has co-founded SimYog technologies, a provider of electronic testing tools, and raised funding from German engineering giant Robert Bosch in January 2019.
As investors in India’s startups have found their feet again — deal flow went up by 51% year on year in February 2019, according to EY — entrepreneurs are also thinking outside the box. In a lab at the 620-acre IIT, Madras, Srinath Ravichandran is trying to rethink small satellite launch with Agnikul. Currently, it costs $70,000 to $80,000 per kg to launch small satellites and there is at least a three-year waiting period to get airborne. Using 3D printing and building from India, his team wants to bring this cost down to as little as $5,000 and drastically shrink the wait, too. This venture is housed in an ideal environment to stage such a breakthrough. IIT-Madras is a hotbed of 3D printing, material design and other engineering disciplines that all need to link together to help Agnikul take this unprecedented launch into space.
Building Global Products
One part of this entrepreneurship evolution are the founders themselves. The second is the market. These ventures aren’t building for India. They are very much building global products. They don’t see speed as an asset. It is the depth of their technology expertise and ability to target a long-term opportunity that matters. “They aren’t interested in vanity metrics such as GMV [gross merchandise value], or ARR to judge the growth of our investments,” says Som Pal Choudhary, cofounder of the Bharat Innovation Fund (BIF), based in the Centre for Innovation Incubation and Entrepreneurship at the Indian Institute of Management, Ahmedabad. “They are building more slowly and predictably for a global audience.” According to multiple investors, deep-tech ventures typically need to raise around $30-40 million between the first seed round and the Series B tranche to stay afloat.
Sai Krishna is in the early stages of his global gameplan, having raised his first round of funding from Axilor and Speciale Investe. Now, his venture Scapic hopes to build India’s definitive artificial and virtual reality technology product, for a global audience. His bet is that evolving technologies such as 3D, 360, VR and AR could be the next big formats on the internet. Scapic has built a SaaS (software as a service) platform to give developers a solution to build content around these technologies, without any coding required. The firm wants to rope in brands to pay and use its content development platform.
The evolution of BIF itself over the past few years points to the potential of this space. CIIE has had a presence as a mentor and early investor in startups [including the $20 million Infuse Ventures, focused on clean energy companies] since 2006, and with its latest iteration, made a broader, bolder bet on these deep-tech ventures. In July 2018, the fund announced its first close of $50 million, with limited partners including the likes of Bajaj, Philips and unnamed banks and financial services companies. It has already made three deals and is now focusing on its second close to bring the total to $100 million. BIF joins a growing list of investors in this space, including Entrepreneur First (committed $115 million to its India unit), Endiya Partners, Speciale and Pi Ventures. “These firms mark the next evolution of India’s startup story,” says Sateesh Andra, founder of Endiya Partners.
Riding this wave hasn’t been easy for entrepreneurs. While investor apathy has been a running complaint, there are other issues to be surmounted. For one, while there are droves of wannabe deep-tech entrepreneurs in the market, staffing their dream venture is hard. Viable engineering talent, already in short supply at old-school outsourcers and the previous generation of startups, comes at a hard-to-afford premium for deep-tech companies. “We are somewhat lucky being in IIT and having a lab and other facilities to show off to potential recruits,” says Ravichandran of Agnikul.
“It can be very lonely on the outside.” If Los Angeles is a global space hot spot [think SpaceX], then entrepreneurs in the field here are queuing up for lower costs and talent, with investors eyeing this leverage while sizing up investments. “The cost for a data scientist is around $300,000 a year… for that amount, I can run a small startup here,” says Vishesh Rajaram of Speciale Invest Advisors, a specialised investor in deep-tech startups. The fund has so far made seven investments in India, including Scapic, Iauro, Total Cloud and Strings.ai.
Since founding Agnikul, Ravichandran has worked with IIT professor Satya Chakravarty and found himself two cofounders to propel Agnikul forward.
Purpose and Durability
According to Ravichandran, the goal is to dramatically reduce the cost of deploying these small satellites [sub-100 kg] from around $70,000 to $80,000 to as little as $5,000, due to cheaper, indigenously developed launch vehicles. The company [and the segment’s] ace-in-the-hole? A raft of qualified experts from India’s space programme, keen to pass on their know-how to these entrepreneurs.
Building with a purpose and durability in mind is something these deep-tech ventures focus on. At Niramai, the team focused, for months, on testing products at three different types of healthcare outfits — tertiary hospitals, basic diagnostic centres and rural healthcare units. According to Manjunath, this helped build a strong data set, given its focus on artificial intelligence and machine learning, and allowed the team to tweak its products before launch. “We fine-tuned the product and deployed it live… now we’re in the early stage of revenue generation and believe we’re at the start of the hockey stick growth phase,” she says.
It takes more than this kind of gumption to build a successful deep-tech venture out of India. Veteran entrepreneurs caution that you have to spot untapped markets at a global level and aim to occupy that space or lean on your technology chops to disrupt an existing market. “This is costly and requires time and capital, neither of which Indian startups have in spades,” says K Ganesh, serial entrepreneur and founder of Growth Story, an incubation outfit. Gestation is also much longer among these ventures, says Manjunath of Niramai, and this could deter entrepreneurs keen to cash out quickly, from building viable ventures.
Meanwhile, some ventures are stepping on the gas. Locus, a logistics solutions provider, is raising a new round of funding, even as AlphaIc, a developer of specialised computer chips, is looking to raise around $15 million soon. SigTuple has made the leap, raising $19 million from Accel Partners and IDG Ventures for its healthcare tech. “Deep-tech startups have made an impact and raised early rounds of funding,” says Manish Singhal, co-founder of Pi Ventures, a specialist investor in the space. “Now they need to show they can sustain this momentum and build viable businesses.”