Good Capital launches to close the funding gap for early-stage Indian startups

Rohan Malhotra and Arjun Malhotra left their jobs in London and Silicon Valley to explore opportunities in India in late 2013. A year later, the brothers launched Investopad to connect with local startup founders and product managers and built a community to exchange insight. Somewhere in the journey, they wrote early checks to social-commerce startup Meesho, which now counts Facebook as an investor, Autonomic, which got acquired by Ford, and HyperTrack, among others. Now the duo is ready to be full-time VCs.

On Monday, they announced Good Capital, a VC fund that would invest in early-stage startups. Through Good Capital’s maiden fund of $25 million, the brothers plan to invest in about half a dozen startups in a year and provide between $100,000 to $2 million in their Seed and Series A financing rounds, they told TechCrunch in an interview last week.

“Through Investopad, we helped startup founders raise money, provided guidance, and helped them find customers. We did a ton of events, and learned about the market,” said Arjun, who worked at Capricorn Investment Group and also acted in 2014 blockbuster Bollywood title “Highway.”

Investopad’s first fund portfolio stands at a gross IRR of 138.3% and nine of its 12 investments have realised returns, with every dollar invested already returned, the brothers said.

Good Capital will focus on investing in startups that are building solutions that address users who have come online in India for the first time in the last two years, they said.

“We don’t have laser-focus on a particular sector,” said Rohan, who previously worked as a sports agent in the talent management business. “Our primary focus is to help startups that are taking a bottom-up approach.”

One example of such startup is Meesho, a social-commerce startup that has amassed over 2 million users who are engaging with the platform to sell products across India.

In a statement, Vidit Aatrey, cofounder and CEO of Meesho, said, “Rohan and Arjun were our earliest investors. They have a phenomenal global network of entrepreneurs, operators and investors. They helped us early on with introductions to such people; who brought not only capital but, more importantly, valuable operational inputs which helped us learn quickly and find product-market fit faster. While we’ve grown from 2 people to over 1,000+ at Meesho, they remain close confidants!”

The VC fund has completed its first close of $12 million from Symphony International Holdings, a host of European family offices, and a number of other Silicon Valley entrepreneurs.

Sundeep Madra, CEO of Ford X, and Yogen Dalal, Partner Emeritus at the Mayfield Fund and founder of Glooko, and Dinesh Moorjani, Managing Director of Comcast Ventures and founder of Hatch Labs and Tinder, will serve as advisors to Good Capital.

“Rohan and Arjun have a unique ability to identify trends and bring together founders and investors to go after the unique problems that India needs to have solved. They operate with a sense of urgency and innovation which is a major key at the seed-stage.” said Madra, who has invested in companies such as Uber and Zenefits.

The fund has also set up an investment committee whose members are Sanjay Kapoor, former CEO of Airtel and now a senior advisor at BCG, Rahul Khanna, formerly a managing partner at Cannan Partners and now founder of Trifecta Capital, and Kashyap Deorah, a serial entrepreneur who is currently building HyperTrack.

Good Capital has also already made two investments: SimSim, a video-based e-commerce platform that is trying to replicate the experience consumers have in offline stores, and Spatial, a cross-reality platform that allows people to collaborate through augmented reality. Garrett Camp, a founder of Uber and Expa, and Samsung Next have also invested in Spatial.

The VC fund is also interested in funding business-to-business startups, though they say these startups would ideally be building solutions for overseas markets. “There we are generally targeting makers, developers and designers, rather than solving problems for heavy-duty sales businesses.”

The arrival of Good Capital should help the Indian startup community, which today has to rely on a handful of VC funds that invest in early stage startups. “Conventionally, funds have targeted the top of the pyramid by exploring visible opportunities and replicated US companies and models,” said Moorjani in a statement.

“In contrast, Good Capital’s first principles thinking applied to India’s larger economy, which is coming online at scale with a supporting ecosystem for the first time, has been refreshing to see. The team is beyond talented.,” he added.

Even as Indian tech startups raised a record $10.5 billion in 2018, early-stage startups saw a decline in the number of deals they participated in and the amount of capital they received.

Early-stage startups participated in 304 deals in 2018 and raised $916 million in funds last year, down from $988 million they raised from 380 rounds in 2017 and $1.096 billion they raised from 430 deals the year before, research firm Venture Intelligence told TechCrunch.

As for Investopad, the brothers said they have hired a number of people who will now continue its operation.

Volocopter raises $55M led by Volvo owner Geely, sets 3-year timeline for its flying taxi service

The promise of flying cars has become an idea more synonymous with the tech world’s shortcomings than its exciting potential, but today one of the startups that has been focused on actually trying to make small, airborne vehicles a reality is announcing a fundraise and says it’s on track for a commercial launch in two to three years.

Volocopter, which has been building drone-like autonomous electric flying taxis for its own (as-yet unlaunched) urban commercial passenger transportation service — the latest model is its two-passenger VoloCity announced earlier this summer — has closed €50 million ($55 million) in funding led by Zhejiang Geely Holding Group Co., Ltd, the Chinese automotive company that owns Volvo, Lotus and a number of other car brands. There are also plans for another significant tranche of money underway, likely to be closed later this year.

In this latest round, Geely is investing alongside other unnamed new and existing investors in the Bruchsal, Germany-based company. Previous backers include Intel and Daimler, the German car giant that owns Mercedes and a number of other brands.

Rene Griemens, Volocopter’s CFO, said in an interview that the German company intends to use the funding to continue working on its taxi R&D; meeting safety and other regulatory requirements for its small taxi vessels (which seat two); working other upcoming models such as those that can transport cargo; and business development around commercial launches.

Indeed, part of this latest investment is paving the way for future business: Geely and Volocopter will be working on a joint venture to bring the Volocopter and its “Urban Air Mobility” concept to China.

While there is no commercial airtaxi or other “flying car” services in existence today in any urban area, the market for hopefuls is a crowded one, with the likes of Lilium, Kitty Hawk, eHang, Uber, and many others building completely new styles of aircraft and hoping to play a role in offering short-range flights as an affordable alternative to road-based transportation. (Blade, an airtaxi service of sorts, is offering more conventional helicopters and other vessels in its limited launch for executives.)

“Urban mobility needs to evolve in the next few years to meet rising demand,” said Florian Reuter, CEO of Volocopter, in a statement. “With our Volocopter air taxis, we are adding a whole new level of mobility in the skies.”

Among its many potential competitors, Volocopter has been one of the more prolific when it comes to building and testing its drone-like vehicles, most recently in Helsinki where it became the first autonomous VTOL — vertical take-off and landing — aircraft to operate in the same airspace as other commercial aircraft.

(You might also recall when Intel brought the Volocopter on stage at CES in Las Vegas in 2018 for a flight demonstration during its keynote, still the only time the Volocopter has been airborne in the US.)

Details on how Volocopter’s service would operate are still — pardon the expression — up in the air, but Griemens said that while Volocopter would own the aircraft, it would likely partner with local operators to help run the service. The average price of each aircraft, he noted, may be akin to a small helicopter, but operations would likely be one-fifth to one-quarter of the price. While initial rides would be expensive, between five and 10 years, they estimate the price would come down to the cost of a taxi ride on the ground.

“The goal was always to democratize flying,” he said.

Its first launch markets are likely to be Singapore, Dubai — where it has a partnership with the city — and an unspecified large European city. That could be somewhere in its home market of Germany, or Helsinki, but just as equally London, where the company has been engaging with city officials on what an airtaxi service could look like. (It’s also part of a new experimental ‘sandbox’ launched by the UK’s Civil Aviation Authority to test out technology related to air-based transportation and travel.)

But even with regulatory frameworks in place, delays can come in many forms. This isn’t even the first time that Volocopter has predicted commercial services in “two to three years.”

Nevertheless, startups like Volocopter represent a credible version of the future of transportation, so for companies like Geely, Daimler and Intel, which still have large legacy businesses, investing in and working with Volocopter gives them a shot at playing a key role (and having a financial stake) in that market.

“Geely is transitioning from being an automotive manufacturer to a mobility technology group, investing in and developing a wide range of next-generation technologies,” said Li Shufu, Geely’s chairman, in a statement. “Our joint venture with Volocopter underlines our confidence in Volocopter air taxis as the next ambitious step in our wider expansion in both electrification and new mobility services.”

Geely already works with Volocopter’s investor Daimler — which has been a prolific investor in next-generation transportation services — on ride-sharing services in the country.