Why we invested in HobSpace
A few days ago, Artha Venture Fund announced its investment in child-activity startup HobSpace. With this being our ninth portfolio, AVF looks forward to ending the year on a high. Our Managing Partner, Anirudh Damani, talks about our decision to invest in Hobspace, where we led the seed round of ₹3.50 crores.
In continuation of our “Why we invested” series, we are back again to answer your queries on our latest investment in HobSpace.
Here we go:
What is HobSpace?
HobSpace is a unique network for extracurricular activities for children between 3 and 14 years. They partner with various schools and coaches to conduct activity classes for kids and teenagers. Each program gets designed intricately to ensure the all-round development of the child.
HobSpace lists activities like dance, fitness, languages, mental agility, etc. taught by experienced instructors who customized the learning for children according to age group, duration, days, and proficiency, providing regular feedback to their parents.
Why does HobSpace exist?
Indian parents realize now (more than ever) the importance of extracurricular activities in a child’s overall development. However, it is difficult for the parent to either:
- find experienced, well-trained and courteous class providers
- find classes in a location convenient to their home to their place of work
- find classes a safe, secure, and sanitized facility for class with the required amenities and tools
- find all of the above at an affordable price
It is not that class providers do not want or wish to provide these options to their customers. However, they require high occupancy rates to spread the cost of real estate, equipment, wear & tear, utility marketing, and training required. Besides, a single trainer cannot maximize the physical infrastructure’s utility without working themselves to the bone.
Taking inspiration from what Mukesh Bansal did for the fitness industry with Cure.fit, Hobspace is a single platform that allows children, parents, and trainers to have seamless access to after school activities, events, and camps on one portal — that’s Hobspace!
Why did we invest in HobSpace?
I was an investor in FindUrClass.com that operated a similar business model with one significant difference. FindUrClass did the heavy lifting of finding excellent class providers that got credibility through verified ratings from mothers. The platform had exceptional promise, but it was ahead of its time; therefore, it faced scaling challenges with mothers or class providers.
However, I had immense learning from an experiment FURC (as we called it) conducted wherein classes got provided at locations booked by FURC. Parents were allowed to pick and choose the courses they wanted to attend. The classes were a resounding success, with several locations selling out quickly and getting a lot of traction for the online platform.
There when Hobspace’s primary business model was to do precisely that, i.e., provide after-school extracurricular classes in a safe and secure environment under Hobspace’s vigilance — I jumped on the opportunity. A fast-growing internet population meant that the time for this idea was finally here.
Hobspace’s model maximizes the productivity of all stake holder’s creating a win-win situation for every stakeholder. Parents could pick and choose courses from an all-in-one app and directly follow their child’s progress with the class providers.
Mind you, that was the business model we were to invest in before the lockdown.
The lockdown quashed all ambitions of conducting physical classes. I was in a quandary whether we could continue to make this investment, but the founder’s surprised me when they took this offline play online and continue to show impressive and growing week-on-week traction! My team and I decided to continue to pursue this investment, and Artha Venture Fund’s investment committee agreed.
Now, as the country starts opening malls, restaurants, theatres, and swimming pools, I realize that the lockdown became a blessing in disguise for the Hobspace team. Their online product opened up a new market for them, far beyond what their offline ambitions would have taken them.
Therefore as the government opens up the economy and reduces restrictions, Hobspace has restarted conversations with their real estate partners to open locations and provide physical classes. However, Hobspace also provides parents with the option of taking classes online, offering a genuinely unique offline-online experience for a child’s overall development.
With over 25 crore Indian children engaged in after-school activities, there is a massive market opportunity for Hobspace to organize this space!
What did we like about HobSpace founders? What sets them apart?
The founders come with excellent credentials.
- Priya has over six years of experience working with corporate giants such as Goldman Sachs (Investment Banking) and S&P Capital IQ. She has also done a short-term project at PharmEasy, and internships at KPMG and EY. During her tenure, she was primarily responsible for industry research, structuring, and syndication of leveraged finance. She holds a bachelor’s degree in financial & investment analysis from the University of Delhi and an MBA in Finance from IMT Ghaziabad.
- Harsh has over five years of consulting and finance experience and has worked with companies such as McKinsey Knowledge Center, ICICI Bank, TCS. During his corporate stint, his primary responsibilities involved market & product strategy and digital transformation. He has completed his PGDM from IMT Ghaziabad.
However, what sets them apart is the tenacity they showed during the lockdown. Priya & Harsh innovated quickly, found a nice and capitalized on it under the most challenging working environments I have seen in 15 years of work life.
There is nothing else required to prove why they were the team to back.
How does the Artha Venture Fund team add value to HobSpace?
There are several places where Artha can be of help, but for starters:
- We have a sizeable number of investments in the parenting space (current and future) that could provide Hobspace with opportunities to reach a broad audience through a trusted player.
- My personal experience with FindURClass and parenting plays will provide the founders with what to do and not do as they scale their venture
- We can provide them access to an extensive network of real estate developers where Hobspace could setup their next location.
Crystal ball gazing, where do you see HobSpace five years from now?
I envision Hobspace becoming the Cult.fit equivalent for kids. There should be a Hobspace center in every major town or city in India, and their online platform would reach where Hobspace could not physically.
If executed well, there could be over 500 Hobspace centers in India in the next 5 years.
