Looking back, looking ahead
Two weeks into the start of the year, spent some time reflecting on how the last year has panned out for us at Arali and the optimism with which we look forward to the new one
In under 3 years, we have completed 12 investments and are into the 13th. We did 5 deals in 2021, completely at odds with probably everyone else in the Indian ecosystem, especially seed-stage investors, most of whom have been hitting their highest ever investment numbers last year. Lot of it is to do with our approach to investing, some of which we have also alluded to in two previous posts, but more on that later. Suffice to say, we are quite satisfied at our approach to seed investing played out in 2021.
Key 2021 highlights include:
Delivering an exit with the Insent acquisition by NASDAQ listed company Zoominfo
80% follow-on rates in our portfolio ( on all investments till H12022)
75% of the entire portfolio is revenue generating, have PMF and are chugging along at anywhere between a 150%-300% CAGR (not sure anything can be more heartening for a seed-stage investor like us)
No mortality in the portfolio, none looking likely in the near future
New Investments in 2021
We completed 5 new investments last year. These range from digitization solutions for the SME/mid-market in India & the US to full stack tech-enabled solutions for large enterprises across healthcare, logistics, travel industries.
Pathfndr.io — the operating system for travel influencers; WizFreight — the OS for freight forwarding and HBOX.ai — the OS for virtual care for primary care/specialised clinics are building out the virtual operating systems for their particular segments. Of the 2 unannounced deals, one is building out a SaaS-enabled marketplace in a very fragmented industry, while the other is a Future of work SaaS solution building an orchestration layer for better collaboration between customer, customer-facing and internal teams.
Follow-on rounds in 2021
We have had 5 follow-on rounds this year in our portfolio, following the 2 we had last year and three more in the works, expected to complete this year.
Unbox Robotics raised two rounds of capital last year, with the most recent being a $7M Series A round in December 2021. Oivi, Finbox and Wiz also raised one round each. Three more are expected to be announced within a month
Our approach to building out a seed portfolio
Contrary to the conventional thought process in seed investing, we have been focused on building out a very concentrated portfolio. This means that we back a limited set of companies and actively work with them to enable scale. This is unlike most seed investors who typically invest in a minimum of 12–15 new deals in a year.
We typically invest in spaces where we understand the market, domain or problem well. When we invest, our understanding of enterprise behavioor, target customer personas, product value proposition/unmet need and sales strategy helps us take a more operator-led approach. This approach goes beyond the typical “I help with network introductions pitch of most VC’s”.
We work actively with our portfolio founders to shape their narrative and approach to scale, help them navigate a variety of challenges that typical early-stage startups face. Supporting design of Unbox’s organizational structure for post-Series A growth, transitioning Pathfndr to a pure subscription model, helping Finbox set up its go-to-market & finance functions are few of the additional kicks we get from this job.
This notwithstanding, we have done our share of network introductions for our portfolio companies and will continue to connect them with the right partners and investors. Some of them we believe will have substantial impact, like introductions to overseas GTM advisors for CynLr; finding a CTO and Ops partners for HBOX
What lies ahead
We are super bullish on what lies ahead for us and our portfolio companies. Below are our key priorities for 2022:
Continue to help portfolio companies scale rapidly. Many of our portfolio companies built a strong foundation and are ready to hyperscale. As is typical in enterprise-tech, they have spent the required time noses to the ground, established value to customers and have set up the growth engine. In 2022, we expect them to see the ground running
Start investing from Fund 2. We are launching our second investment fund in mid-2022 (more on this soon),we want to double down on what we have done so far in fund 1 — pre-seed & seed investing in enterprise-tech. Arali 2 will be a $40M fund, thi will give us more ammunition to take larger positions at early stages and hold positions in follow-on rounds.
Thesis-led investing. We will be doubling down on startups that focus on solving for deep enterprise value. Areas that we will continue to focus on are SaaS solutions and SaaS-enabled marketplaces, disruptive technologies for manufacturing and supply chain automation, Infrastructure plays in digital health, B2B products in fintech and insuretech, CFO technologies and developer tooling solutions. In addition, we will explore enterprise plays in climate/sustainability-tech and web3.0.
Expand the advisory ecosystem. This year, we will look to amplify the operator-led approach by expanding our existing ecosystem of partners and advisors. We plan to rope in more ex-founders, enterprise-tech practitioners, and enterprises as part of our ecosystem. We also plan to develop an advisory/part-time consulting network to work with all our portfolio companies on areas like product advisory, overseas go-to-market, digital marketing, tech/engineering, and talent.
The die is cast. Cant wait for 2022 to unfold
