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Sateesh Andra is a Managing Partner at Ventureast, primarily overseeing the Ventureast Tenet Fund, a premier seed-stage VC Fund consisting of investments across technology (Mobility, Cloud, Internet) and technology-enabled (Education, Healthcare, Financial services, Cleantech and high-impact, invention- based social businesses) sectors. He has worked in or with venture-backed technology start-ups in U.S/ India for the past fourteen years. With hands-on start-up experience and in-depth knowledge of the dynamics of VC funding, he looks for highly motivated and energetic entrepreneurs to partner with.
In an endeavor to understand the juxtaposition between technology, social enterprise and impact investing, Noopur Desai from Shujog set out to interview Mr. Andra to gather his expert opinion on the subject.
Could you share with our readers your journey from being an entrepreneur to a venture capitalist and now, a managing partner at Ventureast?
I am an engineer by education. I spent 10+ years in the Silicon Valley as an engineer, marketer and then with startups. In my 15 years of working, half of my life was working for larger corporations. The other half was with two startups. The journey moved from engineering to product marketing to business development to more of an entrepreneurial role of a founder and a CEO. I left the United States in 2008 to join Draper Fisher Jurvetson (DFJ), a venture capital fund. Two years ago, I left DFJ, primarily because DFJ was more involved with Series A and Series B funding; and I saw an opportunity with seed and early stage investments, where entrepreneurs require a lot of mentoring and handholding. It was very exciting to me – an idea, a team and a potential market opportunity; and how do you jumpstart and build certain critical mass before one really raises large amounts of funding. At DFJ, we were not thinking impact, but sliced it from a large market opportunity perspective. DFJ was an investor in Husk Power System and D.light, among others. At Ventureast, we have invested in OneBreath, MediAngels, Desi Crew, InOpen, Rope, Vortex, among others. At Ventureast, there is more of a developmental angle with a focus on impact. I continue to stay very excited about the impact space. Sectors like education, healthcare, livelihoods, agriculture, clean energy and water are very interesting. And of course, technology for development is a must to scale these ventures.
Given your experience working with social enterprises, could you site for our readers, some of your favorite technology based social innovations?
There are many enterprises that are interesting. From a technology perspective, One Breath, In Open and Desi Crew are three enterprises, among others, that are creating a lot of impact.
One Breath is a low cost medical ventilator. Normally, ventilators cost around US$ 20,000 and one breath is around US$2000-2500; almost a tenfold reduction of cost with a potential of saving many lives. There are around 3.6 million people who die each year in India, due to respiratory illness; and in case of any pandemic scenarios, we need a million+ ventilators. In South Africa, 3 out of 4 hospitals do not have intensive care units. When we look at these metrics, there is a need for portable low cost, high precision ventilators at an affordable cost. This is the gap One Breath is solving. It is a fabulous innovation with a great global team. A lot of design is done in the United States and the initial go-to-market is happening in India.
InOpen does computer education for school children. The idea is to teach life skills through computer education. STEM education – Science, Technology, English and Maths, in my opinion, is very important; especially when one has to be job ready as a student. Not all students will continue to finish their education and they need vocational skills to get jobs. In Open has close to half a million students and several thousand teachers trained. The impact is humongous, in terms of change in the mind set of students and preparing them for their future.
Desi Crew is interesting as they are arresting migration to the cities. There are lot of people who migrate to cities; and cities do not have the infrastructure to support the influx. Desi Crew takes knowledge jobs to the villages. It is not so much a voice call center, but it is a certain amount of knowledge processing work. Technology is used to deliver these services.
Apart from clean technology and financial inclusion, which other critical need sectors do you see technology playing a larger role going forward?
Health care is an important sector. We have invested in a healthcare enterprise called MediAngels. The enterprise focuses on delivery near real time expert and second opinion medical services. We cannot bring expert doctors to smaller towns and this is where we need technology, to access expertise in real time. Healthcare, especially, digital health is a growing sector with humongous impact. Education is another sector, where technology has a large role to play. We have seen examples of how platforms like Coursera and EdX are catering to higher education. Then there are platforms like Khan Academy that are catering to elementary education. At each level, for enabling individualized and personalized learning, technology will play a big role. Further, livelihoods creation and agriculture are other sectors where there is potential for technology to play a big role.
What, in your opinion, are some of the biggest challenges faced by social enterprises?
For most enterprises, very poor physical infrastructure and under developed value chains coupled with a very thin pools of skilled labor are some of the bigger challenges. The other challenge is that, it is very difficult to raise capital in the early stages. While, there are some active platforms for raising capital, it is still very difficult. Further, these type of enterprises need teams with both entrepreneurship and operating experience. Local knowledge is a must.
Overall, the double bottom line of social returns and financial returns is an issue. And it is in some way the social versus financial returns issue that caused the microfinance debacle happened. The key is how do we mentor these enterprises and help them with fund raising with right amounts of equity, grant or debt. That is very important.
In your experience, what is it that impact investors could do to ensure that their portfolio does not experience a mission drift?
If the purpose is lost, there is no point. One of the things we look at, is how strongly the entrepreneurial team is connected with the purpose. We have an example with microfinance – the idea initially was to help the village entrepreneur really create and share wealth. But over time, as it started getting feverish and the industry started driving numbers, the end use of proceeds were neglected. There were loans dished out without being monitored; and there were entrepreneurs borrowing at 26-30% and not using it for income generation. There is no way the borrowers were going to be able to pay you back. The purpose was lost.
For any enterprise, social or traditional, team purpose alignment is a big must and as an investor, one needs to be very careful about this; and as a team it is highly important to assess their honesty and commitment to the purpose. If the purpose is lost, it is time to shut down.
According to you what is the ‘Key to success’ mantra for technology based social enterprises?
Eventually technology alone is not going to cut it, there needs to be a right mix of service experience. Getting the technology right in terms of scale and price is highly important. But it needs to be coupled with the right service and maintaining service quality, even at scale, is crucial.
Where do you see the future of the impact investing space?
For impact funds specifically, it is important that there is a right set of limited partners who are giving the money. Otherwise, this can create confusion leading to artificially engineering some enterprises. Further, there needs to be a right balance between social and financial returns.
Collaboration is a key. The industry has to work with each other – whether it is angel investors, incubators, accelerators, grant funding vehicles, universities, CSR arms or even main stream VC funds. Once the social enterprises grows, it is no different from a traditional start up and collaboration is very important.
What advice would you give to impact investors working with technology based social enterprises?
Most importantly, the enterprises intellectual property or the ability to produce technology is critical. At the end of the day, the enterprise has to radically bring down the cost while maintaining the same functionality, performance and be efficient. The feasibility of the technology needs to be studied. Further, it is also important to understand if the technology can be produced to scale. As investors, these are some aspects to keep in mind.
Looking back at your journey, is there something that you would have done differently?
No, not really. I am quite happy. But I am happy about the growing number of startups created by young entrepreneurs. Like I suggested earlier, I spent 8 years of my career working for large corporations and it was a good experience. It helped me develop specific domain expertise which would not be possible without investing that kind of time in it. My path was a little different. Today, the trend is that young people become entrepreneurs right after school and that is a good change. That being said, I do not regret anything.
Could you share with our readers, your inspiration and goals for the future?
Personally, working with great entrepreneurs who build good companies and change the world; and have tremendous impact on the society; is very inspiring. In my opinion, every start up creates a value – by creating jobs, adding to the GDP growth – everyone is creating impact. However, working with the so called bottom of the pyramid, less or underprivileged – sourcing or supplying to them is a very noble endeavor. I want to continue to work with these entrepreneurs, mentor them, help them grow to the next level and build valuable enterprises.