Why B Capital sees the greatest opportunity in India

In 2020, Neelkantha Bhanu decided to act on his vision to change India’s math curriculum and how it’s taught by establishing edtech startup Bhanzu. Its proprietary curriculum and pedagogy aims to help students understand the rationale behind an equation, ultimately nurturing what he calls “thinkers who can engineer their own methodologies.”

By taking a product-first approach and building a brand, the man known as the “world’s fastest human calculator” has created a firm that raised a US$15 million series A in 2022 from multiple investors, including B Capital.

Bhanu’s success is indicative of the digital revolution taking place in India. Out of its 1.3 billion population in December 2017, 481 million had access to the internet. By 2022, that number figure had increased significantly to over 800 million.

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In fact, as the country is poised to be the world’s third-largest economy, the next 10 years will be “India’s decade,” brimming with innovation, talent, and diversity to address challenges the country’s of digitalization, according to Morgan Stanley.

This will lead to significant opportunities for startups, says Karan Mohla, general partner at B Capital. Mohla heads the firm’s early-stage investment Ascent fund, which raised US$250 million in India and Southeast Asia in July 2022. His team is keen on investing in founders with great ideas and inventive technologies coming up in the region.

“We believe the timing is right, and a firm like B Capital has the insights and expertise to double down on great companies and founders,” he says. “We are excited about the opportunity to support and invest in these dynamic startups that are driving economic growth in India and beyond.”

India’s tech market has room to grow

While India has been digitalizing since 2010, the surge in online users in the late 2010s can be credited to a move by Reliance Jio. The telecommunications giant revolutionized mobile internet usage by offering free unlimited 4G to customers for an extended period in 2017.

“It gave the catalyst for everybody to become a digital citizen,” says Mohla. “The dividends of Reliance Jio’s special offer in 2017 are being felt even today, almost six years later.”

The government has also played an important role through digital-friendly policies and initiatives. For example, India’s Universal Payments Interface provides a robust infrastructure for real-time payments. This innovation has improved money transfers, reduced cash flow uncertainty for companies, and spurred economic growth.

Karan Mohla, general partner at B Capital / Photo credit: B Capital

The government-backed Open Network for Digital Commerce was launched recently as well, leveling the playing field for small merchants across the country by providing them a decentralized ecommerce network that rivals giants like Amazon and Walmart.

“These digitalization efforts brought millions of Indians online,” says Mohla. “And this trend was further accelerated during the Covid-19 pandemic when we saw an explosion in digital companies, entrepreneurs, and founders.”

Providing capital for key verticals

Against this backdrop, B Capital has its eye on a few key areas.

“We believe that category-defining companies are found at the intersection of large markets with unmet needs, are enabled with novel technologies and processes, and are led by innovative, experienced teams,” Mohla shares.

“We see tremendous potential in the enterprise, fintech, and healthcare verticals, among others.”

SaaS and fintech startups, in particular, accounted for one-third of all startup funding in 2022, a sign of their huge promise in the country.

Although India had only one SaaS unicorn in 2018, there are now about 12 to 15, marking significant growth in the sector, Mohla points out. This upward trend is likely to continue for the next 10 years.

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On the fintech front, B Capital sees opportunity in the country’s underbanked community – most people only have very basic savings accounts or checking accounts.

Mohla also sees India’s middle-class population of over 700 million as a promising market segment due to the potential demand for financial products.

Healthcare is another vertical that deserves attention, as it has traditionally lagged behind in development. The lack of physical care infrastructure and healthcare professionals presents a unique opportunity for public and private actors to leverage technology to improve the sector.

For example, the government has developed the National Health Stack, a platform for hospitals and other health service providers in India to store all digital records.

“This creates a network of health records for a population that is highly under-insured, or uninsured completely,” says Mohla.

Digital health is a huge driver of India’s current growth, Mohla adds, saying that B Capital has also backed companies in the space.

Helping founders make the right decisions

In addition to capital, Mohla shares that B Capital believes in being an active partner to founders, ensuring that they have access to the resources and networks they need to excel.

It gives portfolio companies access to its global network of investors, entrepreneurs, and industry experts, who can provide strategic guidance and support in areas such as hiring and business growth.

In addition to its internal platform team, B Capital has a strategic partnership with Boston Consulting Group, which provides guidance on strategic, capital, and people advisory initiatives.

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With the support of these resources, B Capital enables entrepreneurs to scale fast and efficiently, expand into new markets, and build exceptional companies. This effort drives better performance for both the VC and its portfolio companies.

“Operating on a global scale, we have the unique opportunity to draw insights and lessons from successful startups in the US, China and other markets and apply them in India,” explains Mohla.

“We believe that sharing knowledge and experience across borders is crucial to accelerating technological innovation and driving growth not just in India, but globally.”

And who is B Capital interested in working with?

It seeks out founders working on “game-changing companies that have the potential to revolutionize how we live and work,” Mohla shares.

These entrepreneurs must have a clear vision and a deep understanding of market and consumer needs.

“While perfection is not a requirement, we value passion, innovation, and direction in the founders we invest in,” he adds. “We are excited to partner with rocket founders building rocket ships.”

India may offer the greatest opportunity

Despite the challenges that Indian startups may face in the future, Mohla is bullish about the potential of India’s startup ecosystem.

“The country’s vibrant entrepreneurial spirit, coupled with its demographic dividend of a young and tech-savvy population, provides a fertile ground for innovation and growth,” he says.

“I am optimistic about the future of Indian startups and their ability to drive economic development and create a positive impact on society.”

At the end of the day, B Capital believes that India’s market offers one of the greatest opportunities in the world today.

“We want to be core players for the growth that lies ahead,” concludes Mohla.

B Capital is a multi-stage global investment firm that partners with extraordinary entrepreneurs to shape the future through technology.

If you’re a rising startup in the region, find out how B Capital can support your journey by visiting its website.

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