B Capital Bets Big On Cross-Border SaaS, Healthcare and Climate Tech Start-Ups In India

Between 2020 and 2021, when many believed that India was emerging as the global edtech capital, Karan Mohla, general partner at US-and Singapore-headquartered venture capital (VC) firm B Capital, cut through the euphoric halo surrounding the sector to analyse its potential. During his numerous chats with various people from the start-up sector, teachers and parents of schoolchildren, he realised one thing—while mathematics is a vital subject for K-12 students influencing their choice for higher education and even career goals, it has high failure rates.  

The Annual Status of Education Report (ASER) 2023 released by Pratham Foundation found that of the 86.8 per cent of youth enrolled in educational institutions across India, a large majority struggled with basic arithmetic well into their teenage years. Only 43.3 per cent of rural youth could solve a simple 3-digit by 1-digit division problem, the report showed.  

Conventional teaching methods that stress theorems and formulae are a key reason for this issue, compounded by a shortage of quality teachers and personalised attention. Though unable to comprehend basic concepts, students are hurried into complex topics, leading to foundational gaps in math proficiency. 

That is when Mohla came across, called the world's fastest human calculator with over 50 Limca Book of World records. While he was impressed by Bhanu's experience in advising and designing math curricula for associations like the National Council of Educational Research and Training, Ministry of Education, and Pratham Foundation, what struck him more was his vision to build an edtech that made learning maths fun and easy. In a landscape cluttered with start-ups force-feeding school curricula, Bhanzu was attempting to fill a crucial gap by prioritising students' math abilities that emphasised solidifying basics before aligning with the necessary subjects from the school syllabus. 

In September 2022, B Capital led a $15 million Series A funding round for Bhanzu, investing $15.97 crore from its Ascent Fund.  
This explains the investment strategy that the global multi-stage VC subscribes to—spending a lot of time with founders to understand their entrepreneurial motivation. This gives them an objective perspective of the start-up, irrespective of the projections put down in a pitch note.  

"While investing in seed rounds, we look at how founders are building solutions for a large market; even if they have a pre-commercialised product that could be early for the existing market," Mohla explained. "For Series A series investments, we check the current revenues, margin profile and unit economics and how that looks on a very short-term forward basis. If a founder can operate these businesses profitably over a short period, then they can create profitable business over a medium to long timeframe." 

Going Through The Learning Curve Personally 

Established in 2015, B Capital is guided by leaders such as Facebook's co-founder Eduardo Saverin, Howard Morgan, Sheila Patel and Raj Ganguly. With a global presence, it collaborates with tech companies across all stages, focusing on enterprise, fintech, and healthcare tech sectors. 

In January 2023, it announced the close of its Growth Fund III, with aggregate capital commitments of approximately $2.1 billion. In July 2022, it announced the $250 million close of Ascent Fund II, its first dedicated early-stage fund. The Ascent team was founded by chair and general partner Howard Morgan, Saverin, general partners Gabe Greenbaum and Karen Page and Mohla. 

Mohla gained a deep understanding of the start-up world during his two-decade-long stints across various investment companies, where he has invested in around 135 start-ups. After graduating in the US, he worked with California-based Jeffries Group in 2003, gaining a bird's eye view of the start-up and VC ecosystem that was shaking off the dust from the dotcom crash.  

He joined IDG Ventures India (later rebranded to Chiratae Ventures) in 2010, and during his 12-year stint there, he was part of the launch of four funds, focusing on consumer, health and SaaS start-ups as a partner. The opportunity to work with B Capital came as a providence since Chiratae had done two to three co-investments with the former.  

Though B Capital was known for its growth investment outlook, the inflexion point in Mohla's career came when it launched the $254 million Ascent Fund to focus on early-stage start-ups in the US, India and Southeast Asia. What excited him was the opportunity to work with Howard Morgan, who was leading this Fund since the American investor is considered a pioneer in the VC world. After all, he had co-founded First Round Capital alongside Josh Kopelman, helped found Idealab with Bill Gross, and served as President of Renaissance Technologies, which he co-founded with Jim Simons.  

During conversations with B Capital's US team three years ago, Mohla got the idea to build the company's Southeast Asia investment platform. "Since I focused on consumer tech, SaaS, B2B, and healthcare at Chiratae, this was a great opportunity at B Capital as the investment ecosystem moved from being tech-enabled to being more core tech in nature," he explained. "We are also spending a lot more time around climate and sustainability." 

Cross-border SaaS and enterprise start-ups are big focus areas for the company, and it is also looking at areas within B2B financial services. In February 2023, it co-led the Series A funding of $13.8 million for commercial electric vehicle (EV) start-up Turno, along with Quona Capital. 

Mohla explained that Turno is creating a financing, distribution and underwriting layer for three-wheeler cargo vehicles EVs. "This requires three elements—understanding the asset, underwriting for these vehicles, which is distinctive from two or four-wheeler EVs, and building the B2B online and offline distribution," he elaborated. 

In the US, the focus is more on tech innovation, while in India and Southeast Asia, the VC lays more emphasis on core tech because the markets are not as evolved as the US, Mohla said. 

Riding The Technology Wave 

B Capital expects that technology will become more central to every business as opposed to just being an enabler. Since there are still many legs to work within the tech enablement, it will look at areas like logistics and supply chain tech or platforms aggregating traditional industries and digitising them instead of looking at consumer tech or e-commerce platforms.  

The company has backed over 40 tech-first start-ups across the US, India and Southeast Asia through the Ascent Fund, which includes seven in India. Among these are cross-border carbon accounting platform Accacia, Nektar.ai - a Saas platform focusing on sales enablement and revenue operations optimization for sales teams, and Gushwork, which provides a platform for SMBs to get on-demand access to cross-border and AI-augmented remote workforce.  

It has also helped some of its Indian portfolio companies – like HealthifyMe, CropIn, and FirstCry – to test the international waters before diving straight in. "Since we have partners in Asia and the US, post-investment, we help founders entering a new region to understand market entry and market dynamics and connect with the right people. For instance, while Accacia's markets are in Singapore, the Middle East, and India, we are helping its founder, Annu Talreja, expand in the US by connecting her to the right channel to improve its revenue. This can happen only if you are globally integrated," he elucidated.  

Beyond the investment team, the company's platform team across the US, India and Southeast Asia, comprising ex-operators and founders, works actively with B Capital's portfolio companies on short to long-term projects, new market entry, new product development adjacency, strategic options to look at and how to help the businesses rapidly scale up.

Adding Value  

The VC is exploring avenues to add value to start-ups they back, besides mentorship and opening up networks. Hence, it established a strategic partnership with Boston Consulting Group eight years ago. The latter's managing partners work with B Capital's portfolio companies, either as advisors or on paid projects in areas like revenue or business enhancement, as well as building go-to-market strategies in new areas.  

Talking about the emerging trends in the VC space, Mohla believes that the focus in the US will move towards large multi-stage multi-sector funding and generalist investment funds will become less. He noted that this has not happened in India yet with the presence of several specialist investment firms.  

However, he predicts that much consolidation will occur among the generalist firms. "That's why we want to focus on areas we think we can actually have a little bit of an edge in helping companies go." 

B Capital is in the process of closing funding for a couple of companies, though Mohla did not share details. It is also doubling down investment in existing well-performing start-ups where it believes there is a fundamental fit between what the company is building and what the market is pulling for.  

He remains optimistic about India's start-up ecosystem despite potential challenges the sector has faced in recent times. "Even founders are taking the time to figure out their product market fit instead of creating that artificially. It's a slow and steady answer, but where we're doing this because we always have reserves to double down on companies that are doing well," he summed up.