The automobile industry is considered one of the challenging verticals of an economy. It is manufacturing-intensive, depends on many national and international supply chains, and demands a lot of capital infusion. That’s why the number of start-ups in the automobile vertical (excluding services) is much lesser than those in the software vertical. Investment companies and venture capitalists, probably for the reasons mentioned above, hesitate to fund such start-ups.
Though the country has Ola Electric and Ather Energy, the biggest challenges for an automobile start-up (in the hardware space) still hover around raising initial funding. Micelio Fund, with a kitty of $20 million parked for investing in clean mobility start-ups, is trying to change that.
Shreya Shibulal, Founder, MicelioMobility, said, “Micelio Fund has invested in five start-ups so far. We want to focus on winners concentrating on clean mobility ideas. We know that we are a relatively small fund. So we are picky about whom we pick and want to work with. We have a purse of INR 140 crore to invest in different start-ups.”
First Such Fund In India
Micelio Fund, which has invested in Cell Propulsion, Sheru, RaceEnergy, ElectricPe and Eplane, claims to be the first fund in India focusing on investing in start-ups working in the green mobility space. Though the fund has a fixed range for infusing funds the first time in a start-up, it is at the same time, like many other VCs, open to participate in future rounds as well.
“We have a fixed range as to how much we can invest in a company in one go but we are open to participating in more rounds of the same company depending on their performance in the vertical,” explained Shibulal.
The founder and team had incepted Micelio Fund to try to empower electric mobility start-ups with seed level funding, but the team is now open to funding start-ups in later stages. The five start-ups that the fund has invested in, as a matter of fact, are past the seed fundraising rounds. Micleio Fund considers the conviction of founders, their complementary skills and the size of the market as the critical aspects for analysing whether the fund will invest money in a start-up or not. Then follow different rounds both within the stakeholders and between the start-ups and stakeholders.
“The automotive space, in general, comes with high barriers in terms of entry. There are certain parts of the automotive ecosystem where the entry barriers are very tough and depend a lot on the financial muscle,” he said.
The fund, as Shibulal explained, tries to not invest in two start-ups working on the same vertical of electric mobility. However, this is not a hard and fast rule for the fund as it is open to listening to pitches made by start-ups in the green mobility domain Shibulal explained Micelio Discovery Studio as an incubation space for companies focusing on EVs to collaborate and create products.
“Micelio Discovery Studio also gives access to equipment, service and technology that is otherwise expensive to own. We also have domain experts who assist EV start-ups,” said Shibulal.
Open To All EV Start-ups
While securing investment from Micelio Fund might not be on the cards for all the start-ups that approach the company, many of these can apply to be incubated at the Micelio Discovery Studio. The biggest perks of getting access to this studio include working with Nexcharge (Exide + Leclanche JV), Hero MotoCorp, Lucas TVS, Sterling & Wilson and Murata – Sony. Shibulal noted that over 120 companies are working inside the incubation centre presently.
“We come from that background and from that space; we understand how an EV start-up works. The icing on the cake is that both Micelio Fund and Discovery Studio work independently. The portfolio companies do not have a compulsion to be a part of the Discovery Studio,” he explained.
Shibulal sees Micelio Fund and Micelio Discovery Studio as two different entities trying to help the EV industry drive forward by encouraging the players involved with participation, collaboration and funding. The business models of these two entities, as pointed out by him, are entirely different from each other. Micelio Fund and Micelio Discovery Studio also follow different monetisation approaches. Start-ups working in the Micelio Discovery Studio can reach out to Micelio Fund to raise investments, but the decision to invest or not rests in the hands of the team members of the latter, and the team members of Micelio Discovery Studio, as per Shibulal, have no say in the same.
“Micelio Discovery Studio does not follow a selection criteria. Anyone who wants to work in the green mobility space is welcome. It is more a call of the start-up whether they would want to join the Discovery Studio or not,” shared Shibulal.
Micelio Fund is focusing on investing in the clean mobility space now. It reviews pitches from start-ups in the hydrogen fuel cell space, battery cell chemistries, EV finance and more such verticals. At the time of its first announcement, the fund had received close to 150 pitches from start-ups. It has so far disbursed INR 19 crore.
“One thing that we have been trying to do with both the portfolio companies and the participants in the Discovery Studio is to seek out collaborations. We know these collaborations can help bring out different components required to fulfil the needs of the end consumer. Partnerships at the knowledge stage can change the game for start-ups as well as big players,” concluded Shibulal.