Yuvraj Singh-run seed fund company – YouWeCanVentures plans to start an incubator soon. The company said the first two arms of this company would be set up in Gurgaon and Bengaluru.
“We want to be a 360 degree fund. Usually, you see funds taking a step up and trying to invest larger ticket sizes. We want to take a step back and get in on the ground floor,” said Nishant Singhal, co-founder & chief investment officer of Youwecan ventures.
The company plans to invest in 30 companies in the next three months and wants a portfolio of 70 companies by the end of FY17. Once the company “graduates” from the incubator, Youwecan will put in seed investment to “help the entrepreneurs continue their growth”. Exits will come once the company reaches Series C, D round of capital investment.
Singhal, however, dismissed questions that the fund may be looking to get on the ground floor to avoid inflated valuations.
“Only the top 10 companies in the country have inflated valuations, the others can explain why they price their equity at a certain price,” he said.
He said the reason for starting the incubator is to tap into a nascent community of entrepreneurs who do not get access to angel investors. “There are just 4,000 angels in the country. There is a need for more incubators. Someone to help entrepreneurs prepare a product,” he said. At the seed stage where Youwecan ventures typically operates, the fund deals with companies with an established product. Now, Singhal said, the company wants to help make product that will be country-independent and can scale faster. But with incubators comes the risk of failures. “We know there is a much bigger risk than doing seed investment, but with risk comes bigger rewards,” said Singhal.
The fund will start with providing office space, high speed internet connections and mentors, just like other incubators. Along with that the incubator will also be giving fledgling companies access to top-end law firms. The company is leveraging Yuvraj’s brand to create a mentor network which will include Vijay Shekhar Sharma of Paytm and Rahul Yadav founder and ex-CEO of Housing.com. “We will add more mentors from our seed fund’s portfolio companies as time passes,” he explained. Also unlike other incubators, Youwecan will not be partnering with any educational institutions. “What the likes of IIT and IIM do is increase your deal flow but we have Yuvi. He is one of the biggest brands in the country,” he explained.
Singhal argued that the linkages between infamy and incubators were misplaced. “In the US, it may be a problem especially as angels close deals in a matter of days. Here it takes months for small cheques to be written. Some of the fast rising stars are results of incubators,” he said.