Nov 2023 | Athera's Odyssey: Unpacking Trends
Hot takes on Q-commerce dynamics, Factory Automation, Celebrity Investments and more
In the second edition of Athera’s Odyssey, we talk about:
Lights, Camera, Investments - Let's unveil the backstage of the entertainment world, where celebs are investing in a diverse array of organizations
Portfolio Perspectives 🔍
Robotics is wide-spreading its wings as a pioneering force altering the fabric of our lives and pushing the boundaries of what's possible.
Our portfolio company, Ati Motors - the leading player in the AMR (Autonomous Mobile Robot) space, is mapping the future of factory automation.
Inspired by self-driving cars and designed with a similar approach to that of Tesla, Ati has built AMRs that navigate the 3D world of factories dynamically irrespective of the environment.
Solving through Adaptability and Simplicity
What stands out is Ati’s immense focus on adaptability. The AMRs adeptly navigate through the factory environment without necessitating any structural adjustments such as altering their factory floors, deconstructing ramps or making any changes.
Ati’s customer portfolio comprises big brands like Bosch, Hyundai, TVS, CEAT, Toyota and many more. Bosch trusted their ideas back in 2018 - and Ati consistently proved their mettle by solving umpteen shop-floor problems.
Ati is tailoring innovative ideas from public street autonomy to specific factory and warehouse environments, solving complex problems with simplicity. They have married all the deep technologies together - robotics, artificial intelligence, computer vision, and state-of-the-art hardware reflecting their dominance in the industry.
Undoubtedly, they didn’t arrive at a use case in the first go. They experimented with prototypes, incorporated the feedback and made necessary tweaks. It all led to crafting AMRs that move without supervision, have no markings, collaborate with humans, and reroute paths dynamically to avoid obstructions.
Tap here to see a quick video on how the AMRs operate across factory floors.
What’s on the cards?
With the recent investment round, Ati is looking forward to expanding its wings across the globe through strategic partnerships - including the US, South East Asia, Europe, Japan and others.
They are bullish on investing in R&D to fuel their expansion plans and aid in the testing of AMRs across varied sectors beyond logistics. Here’s their growth story covered by Forbes India.
Thriving in Emerging Markets
Founded in Bangalore, Ati embodies the vision of ‘Built in India, for the world’. All thanks to the challenging factory environments in India that led to building robust products - fostering innovation as well as resilience.
Every day is a challenge when it comes to emerging markets, and that further translates to the need for deeper engineering talent. The usual learning curve in Robotics start-ups involves a lot of trial and error.
India is in the early stages of its journey in the field of Robotics, but brimming with possibilities for growth. Ati Motors is marching ahead and contributing to the country’s vision of becoming a global manufacturing hub and exemplifying the capabilities of the Indian startup ecosystem - while meeting the evolving needs of the customers.
Ecosystem Stories and Discoveries 📖
We're living in a world where our fingers do the talking, constantly swiping through apps, whether it's for a quick scroll through a news feed or getting every small thing via a utility app delivered - from medicines to meat and everything in between.
Today’s digital age is fueled by smartphones and high-speed internet, which intertwines with a desire for instant gratification.
Setting the Stage
In early 2021, the demand for 10-minute grocery delivery was created. BigBasket pioneered the online grocery delivery space in India over a decade ago and joined the ultra-fast delivery wagon with BBNow in June 2022.
The Q-commerce model was served to the consumers and they said why not!? The orders were swiftly fulfilled which led to a significant behavioural shift in consumers - forming new habits.
The Economic Reality Check
The quick commerce model is essentially a low average-order value business. The average order value for a slot-based delivery ranges between 1200-1500 INR whereas for Q-commerce it would range between 400-500 INR. While for slotted deliveries a customer would visit the app 3-4 times a month, for quick deliveries, they would visit it 2-3 times a week.
Four things are very critical to sustain the quick delivery model:
A 400-500 INR Average Order Value is essential.
High Order Density
Need for high Gross Margins with delivery fees resulting in higher prices.
Low last mile cost of delivery
It is important to understand the market well and choose the right (dense) localities for ultra-fast deliveries. It is okay to not cover the whole town - because high order density is directly proportional to profitability. The more the number of people (orders) in an area, the lower the cost of delivery.
The BB Synergy: Slotted + Quick Deliveries
In the context of BigBasket - we’re tag-teaming. Warehousing facilities, dark stores, delivery fleets, and employees are shared between the two businesses resulting in better unit economics and profitability for both. This operational efficiency contributes to the overall profitable scale of the business model.
Smarter Routes for Safer Rides
While fast delivery is the end game, the safety of delivery executives needs to be prioritized. They are paid based on the number of orders delivered and - on time or not. This often leads to rash driving compromising the safety of the riders. With smart route optimization techniques and adding enough buffer time, one can ensure both - driver safety and timely delivery.
Striking a Balance: Treading the Q-commerce Path
It's crucial to strike a balance between the demand for fast delivery and control and manage unit economics. There are tough calls to be made like higher pricing, charging delivery fees, and a constrained assortment of merely 6000-8000 products. The goal is not just to scale but to scale profitably.
Athera’s Almanac 🗺️
In November 2021, PolicyBazaar (listed as PB Fintech) went public and marked a significant milestone in the online insurance distribution sector.
Athera invested in PolicyBazaar in March 2013 and partnered through their transformational journey and ultimate triumph as an insurance aggregator - in India and beyond.
Yashish and Alok founded PolicyBazaar in 2008, inspired by a vision to reshape how India approached insurance.
They set out to prioritise coverage over premiums - challenging the traditional norms. However, changing the typical consumer approach towards “buying coverage” was arduous - as Indians are reluctant to buy into “pure coverage - no money return” products.
A pivotal point in PolicyBazaar’s path was its decision to shift its offering, around the time of Athera’s 2013 initial investment, from lead-provision to a transaction-based offering. This strategic shift cemented the foundation of PolicyBazaar’s growth story.
In 2012, despite a founder’s exit, the ongoing transition from leads to transactions and considerable regulatory overhead, we focused on the unwavering passion and expertise demonstrated by the entire team.
While every investment is a leap of faith, in PolicyBazaar’s case, we made several exceptions. We're glad that we had the gumption to do so.
We led a $5M investment in March 2013, investing $3M from our second fund. The company's outstanding execution capabilities, frugality and ability to manage relationships with insurers/regulators propelled it forward.
A major shift from traditional door-to-door insurance sales to an online platform required extensive efforts and high advertising budgets. PolicyBazaar successfully navigated these challenges, changing people’s mindsets on term insurance and health insurance - which while not being simple products to sell are very profitable/annuity-type categories.
There was no monopoly. Some of PolicyBazaar’s competitors were fairly well-funded. Yet, their relentless focus on education and what “good insurance” means for a customer, stood it in good stead.
Another strategic choice was to become an insurance company - however, Yashish & Alok were clear that they didn't want to compete with their customers.
The company’s execution chops were on display again when they started PaisaBazaar in 2014. There was a well-funded incumbent in the digital consumer credit marketplace then. Within 5 years, PaisaBazaar had overtaken the said competitor.
The IPO Trail
A successful IPO is a journey, of around 2 years and post-IPO share performance isn't always smooth sailing.
The steep declines witnessed in the stock prices of loss-making makings on stock exchanges worldwide had a corresponding impact on PolicyBazaar, as well. The stock which had risen to ~Rs. 1,400 (from its IPO price of Rs. 980) dropped to as low as ~Rs. 350 in Oct’22.
In these gut-wrenching times, PolicyBazaar maintained its focus on achieving profitability and put out an audacious target of a profit of Rs. 1,000 crores for the year ending March 2027.
Based on execution in the last few quarters, the market is beginning to believe - the share price has recovered to > Rs. 800. PolicyBazaar expects to be PAT profitable (unadjusted!) in FY’24.
Thus proving that patience and long-term thinking always pay off.
Beyond the Horizons🌄
Lights, Capital, Investments!
Let's unveil the backstage of the entertainment world, where celebs are stepping into the startup scene as strategic players investing in a diverse array of organizations.
Over the past decade, film stars and celebs have gone beyond their usual red carpets and stage lights and started venturing into the start-up ecosystem - backing startups across industries. While celebrities traditionally relied on their family members to manage their finances, young stars are now diversifying their investments across different asset classes ranging from public markets, real estate and the startup ecosystem.
This trend reflects a recognition of the potential for substantial returns in the rapidly evolving startup ecosystem. A-List celebrities are now setting up family offices to identify new trends and purchase equity in disruptive companies. Celebs endorsing D2C brands has been a known trend. However, with the booming tech ecosystem, they are increasingly investing into tech ranging from EdTech, FinTech to even CleanTech!
Rolling the Dice on Startups
Ashton Kutcher, an acclaimed Hollywood actor pioneered investing in start-ups, making strategic bets on transformative tech companies. He kickstarted his venture firm, A-Grade Investments in 2010 and has exhibited a knack for identifying disruptive innovations. His early investments in Skype, Uber, Airbnb, Spotify, and Pinterest showcased foresight and a keen understanding of the tech landscape.
Rapper Snoop Dogg has shown his savvy entrepreneurial mindset by backing tech companies like Robinhood, Slack, and Stripe. And a few more:
Indian Investment Blockbusters
The trend of investing in start-ups has unequivocally transcended Indian celebrities from the West.
Shilpa Shetty has been an early investor in MamaEarth—a beauty product brand that made its debut on the NSE earlier this month. Alia Bhatt and Katrina Kaif were early investors in Nykaa, backing the startup in 2018.
Deepika Padukone was an early investor in Atomberg, which revolutionized the Indian home appliance market.
Farhan Akhtar has backed Ola Electric, which is now on a path to an IPO. This not only showcases the prudent thinking of these celebs but also their eye for game-changing technologies.
Aishwarya Rai Bachchan has backed Ambee, an environmental intelligence company. It is exciting to see these strides towards investing in the booming DeepTech sector. The sheer awareness possessed by some Indian celebrities is refreshing!
The Indian Cricket Team has also been at the forefront of startup investments. The most prominent investor has been Mahendra Singh Dhoni who has backed a diverse range of startups from Khatabook and Cars24 to Rigi. Dhoni's investments go beyond financial support, often involving active participation and mentorship, thus reflecting his passion for entrepreneurship.
Virat Kohli, in addition to starting his clothing brand, Wrogn, has invested in Digit Insurance along with his wife, Anushka Sharma.
From Glam to Growth
The trend of celebrities investing in startups signifies a tectonic shift in the traditional role of public figures. Beyond their on-screen personas, celebrities are becoming strategic players in the entrepreneurial landscape, injecting capital, influence, and expertise into innovative ideas.
From tech unicorns to sustainable initiatives, these investments not only diversify celebrity portfolios but also foster an environment of collaboration between the entertainment industry and the business world.