Welcome to our ‘Fund in Focus’ series where we profile our member funds, underscore their investment philosophy, and highlight some of their interesting work. Today we speak to Jyotsna Krishnan, Managing Partner, Elevar Equity. In this feature, Jyotsna throws light on how Elevar works with passionate founders to build enduring, impactful companies.
Fund in Focus: A Deep Dive into Elevar Equity's 15+ Year Journey of Impactful Investments
1. How would you describe your investment philosophy and approach to sustainable growth?
Elevar Equity’s investment strategy is about backing seasoned business leaders that have turned entrepreneurial to build out commercial business models that deliver high quality and affordable essential services to underserved communities across India and Latin America. Essential services tend to include education, agriculture, MSME services, financial services, housing and healthcare - all areas of high priority for discerning households with increasing purchasing power, aspiring for growth and seeking higher quality services.
We are normally the first institutional investor in our portfolio companies. Our role as an early investor has been an important one in helping founders build organizational DNA that stays true to commercial discipline as well as remain ‘customer centric’ in the long run.
Thus far, in our 15+ year journey, we have raised 5 funds, democratized essential services for over 50 million households, and catalyzed billions of dollars of capital into 47 companies.
2. What sets Elevar Equity apart from other private equity firms in terms of its investment strategy and focus?
We are fairly unique in our customer centric thesis and concentrated early-growth stage strategy:
We firmly believe in taking a bottom up approach to developing our investment thesis. We spend considerable time with underserved customers on the field to develop a deep understanding of their aspirations, priorities, cash flows and challenges, and translate these insights into our investment strategy
Given our conviction and understanding of our markets, we are able to invest early - often as day zero investors - and yet build a concentrated portfolio (translating to 2-3 new investments a year) with a low loss ratio. We tend to double down on fewer companies and are disciplined in how we approach matters of P&L and governance. We do this in order to lay down the foundation for long term scale, very early in the journey
We are also clear that we invest only in business models where impact is at the core, with high impact leading to high returns. For Elevar, impact is not a metric to be measured ‘on the side’, but it should be measurable through thoughtful business metrics
3. How does Elevar Equity prioritize environmental, social, and governance (ESG) factors in its investment decisions?
Since our investment thesis is premised on breaking barriers of access and inequity for underserved customers, ESG has always been at the core of how we invest. As early stage investors in emerging markets’ companies, we recognize the role we play in providing entrepreneurs and businesses the right insights, frameworks, and guidance to build long-term sustainability and impact.
We believe that implementing ESG requires an authentic approach that is reflective of the company’s business model, industry and stage of maturity / evolution. Our ESG approach takes this into account, with interventions designed for each stage of the company’s growth lifecycle. Check out our recent Impact Report (page 39 onwards) to learn more about how we engage with our portfolio to help think through their ESG approach.
4. Can you provide insights into the typical size of investments Elevar Equity makes and the geographic regions you primarily target?
We are usually the first institutional investor in our companies and our check sizes range between $2Mn and $5Mn for seed to Series A round - we also like to reserve meaningfully for follow-on rounds. We currently target business models that are based in India and Latin America.
5. How does Elevar Equity support portfolio companies beyond financial investment? What resources or expertise do you offer to help them succeed?
Entrepreneurs like to tap into our deep experience of almost two decades in helping companies scale - this spans across multiple strategic aspects including:
Unit economics and P&L discipline:Scale creates impact, and scale requires capital and talent. Both capital and talent value wealth creation opportunities. Building an enduring organization requires discipline through the highs and lows of the market - and we help reinforce this discipline
Organization building:Working with companies at every stage of their growth cycle to think through distribution economics, identifying product-market fit, senior team recruitment, building the organizational platform for scale and finally, achieving scale
Governance:Ensuring best practices around governance and ESG standards - not just in form but in spirit. Laying these foundations early on has helped companies build well respected brands across stakeholders
Calling it like it is:Honest feedback and perspective based on collective experience - this is hard to explain, but we have grown to appreciate how valuable this is to our entrepreneurs
Customer and market insights:Our direct engagement with the customers our companies serve forms the basis for several critical strategic discussions that are differentiated
Strategic resources:We offer our founders engagement with a select set of experienced advisors that are on board with us and deeply care about the success of our founders - these include experts on talent and HR, tech and data, former successful entrepreneurs and retail distribution experts
Sounding board through a lonely journey:Being an entrepreneur is lonely - from challenging fundraising environments to building a team from scratch. Entrepreneurs tend to reach out to us and we proactively engage to de-risk the journey and keep the focus on the ambition to build scale for impact
6. What key performance indicators (KPIs) do you consider most important when evaluating the success of an investment?
As mentioned earlier, we believe in building enduring, customer centric organizations that can scale sustainably and impact millions of lives. We divide the company building process into three stages of growth, focusing on different KPIs at each stage to achieve the above goals.:
Distribution Economics:This stage is about validating the business model, establishing customer margins and demand. Hence positive distribution economics become important at this stage, along with ensuring that the business model’s DNA is centered around the needs of the underserved customer
Organizational Platform:This stage is about establishing an organization platform for scale, and about ensuring that the business model creates genuine value for the customer, leading to customer loyalty and advocacy - a critical foundational step for sustainable scale
Expansion:At this stage, scaling the organization becomes the key focus area, from both the impact (e.g. no. of underserved customers impacted) and returns dimension
Ultimately, when a company is attractive, there is demand from investors (public or private) and exits follow course - we focus on building companies that reach scale and are attractive for incoming investors.
7. How does Elevar Equity approach diversity and inclusion in both its investment strategy and within its own organization?
Elevar has a natural gender lens in the way it drives impact- our investment strategy focuses on solutions that empower underserved households and women throughout the business value chain.
We have a majority of women in our leadership and team - 4 out of 6 partners are female and ~60% employees are female. This has been core to our DNA - trying to bring about change in the world requires diversity of thinking, and gender diversity at senior levels is one form of diversity.
To take a more explicit stance, we have also aligned our management and measurement with the 2X Challenge and Beyond the Billion initiatives (both initiatives were launched to drive more intentional gender diversity in the world of investing and entrepreneurship). Our most recent fund, Elevar Fund V, was deemed a "Flagship Fund" by the 2X Challenge Committee.
8. Share some interesting work by a few of your portfolio companies in terms of market problems they are trying to solve and impact generated so far.
LEADERSHIP BOULEVARD
Leadership Boulevard (LEAD) was founded with the vision to make excellent education accessible and affordable to children in underserved communities across India. LEAD’s ‘school-in-a-box’ solution empowers affordable private school (APS - typically in an annual fee range of $150-700) operators in India and caters to the needs of largely first-generation learners in the low-income segment. LEAD’s integrated solution keeps the child’s learning outcomes as the focal point, while seamlessly addressing pain points across every stakeholder’s continuum, in school and at home.
Collectively, the founders Sumeet and Smita bring over 40 years of experience, much of it in the education space. LEAD’s solutions are steeped in the learnings of the entrepreneurs, having personally run a few schools in remote areas for several years.
LEAD supports 9000+ schools today and has reached 5 Mn+ students. The company has demonstrated strong student learning outcomes despite Covid related disruptions: with 1.6 years of measurable learning improvement in literacy and comprehension and over 77% mastery achieved in other subjects such as math, science and social studies.
Earlier in 2023, LEAD completed its acquisition of the local K-12 learning business of Pearson India. With this acquisition, LEAD now has the largest portfolio of school ed-tech products and services and aims to better serve the learning needs of the entire spectrum of over 500,000 private schools in India.
SAMUNNATI
Samunnati was founded with the vision to make markets work for smallholder farmers. The company is India’s largest ‘Open Agri Network’, unlocking commerce and finance across agricultural value chains and platforms. Samunnati offers a range of solutions that empower agri supply chain players like smallholder farmers, FPOs (Farmer Producer Organizations – membership based collective action groups of farmers), MSMEs in agri value chains and agricultural enterprises.
Founder and CEO Anil Kumar SG has over three decades of experience in the banking and microfinance industry - most of it in rural India - and has a deeply nuanced understanding of the agri segment.
Samunnati has deep presence across 5 key agri value chains spread over 22 states in India and has powered over $2Bn of gross transaction value in its journey so far. Samunnati currently has access to 5500+ Farmer Collectives with a member base of ~9 million farmers and envisions impacting 1 in every 4 farming households through its network by 2027.
CUREBAY
CureBay aims to transform the patient experience in remote locations of India by providing affordable and high-quality primary healthcare through a hybrid model – a network of physical e-clinics, powered by a robust technology platform. Each e-clinic is in a location that has limited or no healthcare within a radius of 5 to 10 kms. It is staffed with a trained nurse and a qualified phlebotomist - mostly local talent known by those in the catchment area. These healthcare workers assist walk-in patients to connect them with city-based doctors via video consultations. CureBay's technology enables doctors to access detailed and personalized patient records, thus helping them to deliver a high-quality diagnosis, equivalent to a physical consultation. Patients also have access to a network of certified partner labs, hospitals for specialized treatment, and the option to get prescribed medicines delivered to them directly through the e-clinics.
Founders Priyo, Shobhan and Sanjay and bring a wealth of complimentary experience across entrepreneurship, operations, and technology.
In its 3 year journey, CureBay has already built 50 eClinics across 18 districts in Odisha, and impacted over 36,000 patients.
NIRO
Niro is an embedded consumer lending platform that aims to democratize access to financial products by leveraging the data and distribution of consumer internet companies. It enables these consumer internet companies to become consumer finance enablers and offer a holistic set of financial products to customers who are historically unserved / underserved by traditional sources of financing such as banks. Niro leverages its platform partners’ brand & engagement to deliver embedded, frictionless and competitive products to their end consumers.
Founders Aditya Kumar and Sankalp Mathur have significant complementary experience, bringing in a strong focus on risk and responsible lending supported by a strong, already built out team and extensive network across fintech & financial services.
Within 20 months of operations, the company has demonstrated strong growth with INR 500 Cr in disbursals and strong strategic tie-ups that give it access to a base of more than 100Mn customers.