Zone Startups closes Rs 190-cr fund

Ajay Ramasubramaniam confidently marched across a BSE conference room, touching base with organisers, coders and even the staff at a recent hackathon. He knew almost everyone by name. Always quick to smile, the man is the director of Zone Startups, a venture fund and accelerator housed at the BSE. He has only one agenda - to find young entrepreneurs with smart business ideas.

Ramasubramaniam has just closed a Rs 190-crore fund and he plans to find the next big winner soon in the tech ecosystem with this one. He plans to invest in 15-20 companies in the next year and will make exits in 20 months after they have raised their first round of funding.

The average ticket size of each investment will be Rs 30-50 lakh, which will suffice as seed money. "We may invest in a few follow-on investments with Rs 1-1.5 crore," said Ramasubramaniam. Some of these will be co-investments with other funds.

The only catch is that Ramasubramaniam has preference for business-to-business companies. "Almost 60 per cent of the companies we invest in are business-focused companies. They are easiest to scale up and even a few customers can pay heavily."

He explained the network that Zone Startups provides can bring these companies at least an enterprise customer, which helps generate income almost immediately. Unlike many others, Zone Startups prefers its companies to be revenue-focused and not in the race for gross merchandise volume.

One of its crown jewels is Canada-based Instagram for doctors called Figure 1. Here, doctors share images and information within the community to help with diagnosis and often share research. The paid platform currently has 500,000 doctors sharing pictures across 100 countries. "These pictures are very carefully monitored. They can't have any identifying marks because it also has to do with patient privacy," Ramasubramaniam added.

The company recently raised $10 million from various North American serial investors. The network might make its way to India soon. Zone Startups also has a keen interest in developing artificial intelligence technology which, according to Ramasubramaniam, will be the next big move to shape the Indian tech landscape.

However, that doesn't mean consumer-focused companies will be ignored. Ramasubramaniam finds the business-to-consumer market quite crowded. "The pie is only that big. You can find five million customers, but how do you get them to pay?" he asked. He insists the ad-based revenue proposition is not strong enough in India to chase.

Zone Startups' record is strong enough to stick to their theme. "We have only 10 failed start-ups out of the 63 that we have invested in," he said.