Home >Money >Venture capital firms begin to take note of robotics business

Venture capital firms that traditionally invest in niche-technology-backed start-ups have turned their attention to robotics.

Getting it right: Syed Ross Farooq (left) and Fahad Azad, managing partners of Robosoft Systems. Abhijit Bhatlekar / Mint

Pune-based Precision Automation and Robotics India Ltd (PARI) received Rs41.4 crore recently from investment management firm Axis Holding Pvt. Ltd’s India Strategic Opportunities Fund. PARI, one of India’s biggest robotics firms, provides automation solutions for both manufacturing and non-manufacturing processes.

IDG Ventures India Advisors Pvt. Ltd, which manages a $150 million (Rs696 crore) fund and makes early-stage investments in technology-enabled companies, is also eyeing the robotics business.

“We have looked at this space and would be interested in investing in it. However, there are certain factors that need to be satisfied," says Manik Arora, founder and managing director, IDG Ventures India.

“Adoption of robotic technology is very limited in India. Hence, we would look at startups that have already bagged some contracts and some clients," says Arora.

IDG Ventures India’s portfolio includes companies such as online advertising network Ozone Media Solutions Pvt. Ltd, security products company iViZ Techno Solutions Pvt. Ltd and multiplayer online games company Kreeda Games India Pvt. Ltd. The firm is part of IDG Ventures, a global network of local venture funds backed by International Data Group, the world’s largest IT media company in terms of reach.

In developed markets, robots are used to carry out functions for which labour may be either scarce or expensive. But in India, because labour is plentiful and inexpensive, it is important that the cost of deploying a robot should be lower than what it would be to hire a person for the same job.

“The price-performance ratio has to be stronger than (in) the developed markets," says Arora.

Indian start-ups have devised robots used to clean air-conditioning ducts in hotels, hospitals and factories, and to clean water tanks used as coolants in processing and manufacturing units. Robots are also used as surveillance aids by the Armed Forces and as educational aids by training institutions.

ThinkLabs, a division of TRI Technosolutions Pvt. Ltd, intends to raise $3-4 million in the next four-five months. “We are looking for funding to expand aggressively in the robotics education field," says ThinkLabs founder Gagan Goyal.

ThinkLabs raised $1 million from Mumbai-based venture capital firm Seedfund in January 2008. With its mentorship, Goyal realized that the ultimate aim of any company in educational robotics, especially higher education, should be career-oriented. It decided to focus on embedded engineering training and set up centres across India.

“We will look at this (robotics) space because at the end of the day there is a technology element to it, but it would be seed-level investment," says Sandeep Singhal, co-founder of venture capital firm Nexus Venture Partners. “We will look at it from that perspective to see how it can scale up, is there a right management backing it, can they take it to the next level, if as an India player, can they build a global business around it."

Industrial robots made by international companies are available in the market for Rs10-15 lakh, so if Indian start-ups have to compete, they need to sell products in the Rs2-5 lakh range, says Singhal. He has looked at three or four companies that are below Rs10 crore mark in terms of annual revenue, Singhal adds.

Robosoft System India, another start-up, focused on the educational segment by holding robotics workshops in schools and colleges, and providing duct-cleaning robots for companies such as air-conditioner maker Blue Star Ltd. “We have orders from the Indian Navy for the duct-cleaning robots. But we are not able to supply to them because of lack of manpower, lack of bandwidth and funding," says Fahad Azad, one of the founders of Robosoft.

“We need funding but we are looking for mentors to help us get our act right as to how the internal operations should be and on what area should we focus on," he says.

Robosoft, which plans to move away from education and gradually get into components manufacturing, is helping develop a miniature device for state-run electricity generator NTPC Ltd to monitor radioactivity in power plants.

Still, for these robotics start-ups to scale up and grow bigger, they need to develop business acumen as well, say venture capitalists.

“While many of these start-ups are backed by individuals who come from a strong technology background, we would need the management to have some business background as well," says Arora.


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