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Inside Activate, venture lender Alteria's bid to create value beyond capital for startups

Inside Activate, venture lender Alteria's bid to create value beyond capital for startups
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Earlier this year, Borosil Glass Works Ltd, a Mumbai-based glassware and kitchenware maker, signed up with Activate, an initiative from venture lender Alteria Capital that seeks to connect enterprises from across sectors with startups. Borosil hopes to have a few pilots running soon with startups that are working on cutting-edge technology solutions, which may help the company introduce innovations across operations such as supply chain management, distribution and production.

“At the moment, within the company, the concept of working with startups doesn’t exist. But we are aware that in India, there are many startups that are introducing cutting-edge technology that can have solutions to our current problems, which means there’s a possibility of disruption,” says Shreevar Kheruka, Borosil’s 37-year-old managing director and chief executive officer (CEO).

Like Borosil, several large enterprises from sectors such as financial services, consumer products and services have signed up with Activate since the launch of the platform in November last year.

Activate’s mission, explains Ajay Hattangdi, founder and managing partner at Alteria, is to create an enabling ecosystem that connect startups, usually from within its portfolio, with large enterprises and service providers such as tax consultants, legal firms, intellectual property researchers and marketing consultants to explore mutually beneficial partnerships.

“Everybody recognises that capital is only one of the resources that a startup needs. There are a bunch of resources such as connections with prospective clients, service providers and investors that are equally necessary,” he says.

Hattangdi, who pioneered the venture debt asset class in India, founded Alteria in 2018 with Vinod Murali. The two worked together for more than 10 years, first at Citigroup and then at InnoVen Capital, the entity that was formed after Silicon Valley Bank-owned SVB India Finance was acquired by Singapore’s state-owned investment arm Temasek Holdings and Singapore-based bank UOB in 2015.

With Alteria, Hattangdi wants to push the boundaries in a bid to differentiate the firm from the rush of venture debt players that have entered the market lately. “Indian venture debt firms will quickly need to find a value proposition that extends beyond just being providers of loans or risk being weeded out of the market,” he says.

The differentiator, he believes, will come from Activate.

Building the ecosystem

Every three months, Activate selects six to seven startups across the sectors and forms a batch of 20 companies every quarter and spends time with the startups to formulate a customised strategy for each.

“We sit down with these companies, startups and large enterprises to understand what their drivers are, their technology and innovation challenges and figure out which startups would be a good connect. We then make introductions in a structured manner,” says Hattangdi.  

The platform facilitates two kinds of partnerships. One is geared towards large corporate enterprises, such as Borosil, which want to engage with startups to find solutions to their technology and innovation challenges. The second is intended to support Alteria’s portfolio companies and prospective ones. “This could be client connects, which gives these companies an option to pitch to some of the bigger giants in the industry, or it could be a tax consultant or legal firm. It could also be other technology startups where they can co-develop programmes,” says Hattangdi.

While Activate doesn’t charge startups anything, corporate enterprises and service providers have to pay a nominal fee. “It isn’t a revenue-generating opportunity for us. We charge corporates and service providers a small fee to cover the cost of running this platform,” he says.

Some of the activities that the platform engages in includes investor pitch sessions, hackathons and outreach programmes. It is currently in the process of making introductions for startups which require working capital and Series A funding, along with hiring, marketing, business development, IP evaluation support and tax compliance.

Early outcomes

While Borosil is an example of a large enterprise that hopes to benefit from the platform, several startups have already seen results. One example is online wealth management platform Clearfunds, which got acquired by digital payments firm One MobiKwik Systems Pvt. Ltd last October.

“I was introduced to Ajay (Ajay Hattangdi) through a common friend and one piece of advice that he gave me was to latch on to a larger company to acquire more customers rather than doing it independently. That was something I was open to and he told us about Activate,” says Kunal Bajaj, co-founder and CEO of Clearfunds.

Despite not being an Alteria portfolio company, the Activate team started work on introducing Clearfunds to a business-to-business (B2B) strategic partner. “Ajay literally called Upasana Taku (co-founder of payments platform MobiKwik) the next day and made introductions. So, it started out as a B2B partnership and turned into a full-fledged acquisition,” he says. Clearfunds is now a 100% subsidiary of MobiKwik. It has 15 million monthly active users and has recently launched services within the MobiKwik app.

Similarly, through Activate, Alteria also connected digital lending platform ZestMoney, a portfolio company, to multiple corporate enterprises, service providers as well as other startups for business development opportunities, joint marketing campaigns and recruitment support.

ZestMoney has now partnered AutomataPi, a cognitive business process automation company, to automate certain crucial customer-facing business processes.

“A lot of investors, when they invest in a company, make promises of providing access to different things to companies but in reality that never happens. What’s nice about Alteria is that they are very cooperative. Rather than me reaching out to them and seeking any sort of help, they are the ones who help us get access to possible introductions that could be beneficial for us as a company,” says Lizzie Chapman, CEO and co-founder, ZestMoney.

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