An exclusive interview with Karan Mittal- Partner at Ev2 Ventures, one of the India’s first Smart Mobility focussed Venture Funds.
Excerpts of the conversation:
1. What is the story behind the beginning of Ev2 Ventures?
Ev2 Ventures was founded by Charles Owen in early 2019, who moved to India in 2018. The Funddidits first close in December 2019. Previously, it was known as Emergent, which was later rebranded as Ev2 Ventures to avoid confusion with another organization with a similar name. Charles was quite intrigued by the opportunities available in India with respect to the mobility sector. I met Charles through a mutual connection and realized our experiences and knowledge in the sector converged seamlessly. And so, here I am!
2. What is the investment thesis of Ev2 Ventures and is the Fund closed?
Ev2 Ventures is an India-focused Smart Mobility Fund that is investing for impact across the smart mobility segment, including EVs and its eco-system, Logistics & Transportation Tech, Agri-Supply Chain, Micro-Mobility, Warehousing Technology, Finance & Aftermarkets, etc.
The Fund is an INR40-50crore (USD to INR Converted terms) micro-VC and is currently at final close, looking to actively deploy capital. Our strategy is to become the domain experts in early-stage smart mobility solutions in the Indian ecosystem. We believe that Smart Mobility investments have a tremendous impact on society by contributing towards environmental developments, economic access&stability, and improvements towards safety and security.
3. What kind of Limited Partners (LPs) have backed Ev2 Ventures?
Ev2 is backed largely by Individuals & UltraHNIs who are based globally across the US, Singapore, UAE, and Africa from leading Automotive & Financial services firms. Some of them are founders of other VC firms as well as Tech Entrepreneurs.
4. What investments has Ev2 made so far and can explain their uniqueness and how are they performing?
Ev2 has made 4 investments so far that highlight certain key aspects of our thesis, which sit at an MOIC of 4.2x. All the portfolios feature positive unit economics which have resulted in positive cash flows in some quarters including a run-way of more than 20-24 months.
Euler Motors is an automotive OEM start-up, offering 3-wheeler holistic electric light commercial vehicles for last-mile logistics. Our investment in Euler is already at a value ~10x.
Enmovil is a logistics analytics company for heavy industrial firms to enhance their bottom line through the power of machine learning and analytics, with a vision to deliver a unified platform to the supplier and transporter to help them identify and fix the source of inefficiencies.
Cogos Trucks offers an intra-city logistics solutions focused on enabling the entire ecosystem of shippers and vendors through an AI-enabled technology platform.
Eveez provides two-wheeler EV’s on a monthly subscription to the gig economy ecosystem for E-commerce, Food, Grocery and Pharma Deliveries.
5. Can you explain your approach towards investing?
This is an exhaustive process, and is based on numerous guidelines. However, to give you a short glimpse of how the fund is focused on investing in start-up companies solving unique business issues faced in India across the Smart Mobility sector, we follow a macro-to-micro approach to evaluating a business. It involves understanding the larger problems which are prevalent in our focus areas and have an analog process post which we dive deeper to understand companies that are looking to solve these macro-analog orientated issues through technological innovation built within India for India. Additionally, there is a stringent and mandatory due diligence process to assess the fit with the fund’s investment strategy. We firmly believe that backing quality entrepreneurs and management teams is of paramount importance, therefore the team interacts extensively with management teams of target companies and conducts considerable reference checks on their backgrounds.
6. As venture capitalists, in what ways do you get involved with a company?
As an actively managed Fund – Post investment we work closely with the management of the portfolio investee companies to implement value-added techniques such as viable restructuring to improve operating efficiency and profitability, develop a business and financing plan, and work closely with appropriate consultants that would help accelerate shareholder value. The objective is to exit from the recipient company by selling the fund’s stakes at a significant profit at the appropriate stage to strategic and financial investors. Every investment made by the fund will be monitored to ensure that the conditions under which the investments were made fructify and the investors’ interests are fully protected till exit.
7. With the focus on ESG and Sustainability as important parameters for any organization today, what are your views and how do you analyze these factors when an idea is pitched to you?
We feel that having an impact-based standpoint is pertinent to our target investment segment, considering the evolution in the automotive and power sectors which are one of the frontrunners for driving towards a sustainable future. The fund derives its impact thesis by combining the SDGs developed by the United Nations and the IFC. We primarily target the goals that are aligned with our industry and measure the improvement of ESG parameters on a yearly basis that includes key goals such as affordable and clean energy; decent work &economic growth; responsible consumption &production and climate action
8. How does Ev2 Ventures view investments during the year 2023?
We are anticipating a subdued investment environment with a lot of otherwise freely available capital drying up. Having said that, we believe that every downturn provides more opportunities and resilient founders who have the ability to exceed when the tide turns. This period will also provide a favorable valuation environment, during which Ev2 ventures is looking to actively deploy funds to anywhere between 3-5 investments over the next year.
