Gemba Capital Launches Second Fund of Rs 250 Crore to Invest in Platform-First Businesses Over the Next Three Years
Gemba Capital, a micro VC firm registered with the Securities and Exchange Board of India (Sebi), has recently unveiled its ambitious second fund. With a planned corpus of Rs 250 crore, which includes an additional green shoe option of Rs 50 crore, this fund signifies a noteworthy step forward in the venture capital space, particularly for early-stage investments.
The primary focus of this new fund will be to target nearly 30 early-stage businesses that operate on a platform-first basis. These industries are spread across three main sectors: fintech, consumer tech, and B2B platforms. Gemba Capital is setting the stage with an initial investment, or “first cheque”, of Rs 5 crores for each of these companies. Moreover, it has earmarked a 30% reserve ratio specifically for follow-on investments in these burgeoning enterprises.
Platform-first businesses, distinguished by their digital foundation, possess the unique capability to forge compounding moats. This is achieved through various means such as ecosystem creation, network effects, or the layering of additional value-added services. It is this kind of innovative business model that Gemba Capital seeks to bolster with its latest fund.
Adith Podhar, the General Partner at Gemba Capital, shared insight into the evolution of the firm’s investment strategy. He stated, “Our journey has evolved from investing proprietary capital to running an angel syndicate and then raising and investing from our Rs70 crore Fund-I. We are now looking to partner with institutional LPs for our Rs250 crore Fund-II. The Indian early-stage startup ecosystem needs more institutional capital to be deployed through single-stage VC funds like us.”
Since its inception in 2018, Gemba Capital has established a reputation for its “low friction collaborative checks”. The venture firm’s first fund, a Rs 70 crore venture dating back to 2022, was predominantly raised through investments from family offices, founders, and CXOs. It boasted an average cheque size of Rs 2 crore. To further enhance its investment strategy, Gemba Capital devised a unique ‘founder market fit framework’. This tool aids in pinpointing the most promising teams to back, ensuring a higher probability of success for their investments.
Govind Lohia, Principal at Gemba Capital, emphasized the firm’s dedication to the seed stage of investment, asserting, “We are one of the leading institutional micro-VC funds in India at the seed stage and we remain committed to being a seed investor. Founders recognize the immense value we bring to the cap-table, which sets us apart. The fund has supported its portfolio companies in multiple areas, including customer introductions, fundraising, and strategic planning.”
Gemba Capital’s track record is impressive, with more than 120 founders across over 50 startups receiving backing. Its portfolio features a diverse array of companies, including but not limited to Plum (Insurtech), Grip Invest, Wint Wealth, Strata, Navadhan, Zuper, Showroom, Smartstaff, ClickPost, and LightFury. This varied portfolio underscores the fund’s ability to identify and nurture high-potential businesses across a wide spectrum of industries.
The launch of Gemba Capital’s second fund marks a significant milestone in the firm’s journey to empower platform-first businesses. With a clear focus on fintech, consumer tech, and B2B platforms, the fund is poised to make a substantial impact on the early-stage startup ecosystem in India. It is a testament to the belief in the transformative power of institutional capital when deployed judiciously in supporting innovative and scalable business models.
