Early-stage venture fund Unitus Ventures is scouting to invest more in job-tech firms and at least for the next five years, they will continue to invest more in this vertical. India’s jobs crisis and aspiration to shift from informal to formal work is creating a big opportunity for new entrepreneurs and making it a key investment theme, Surya Mantha, senior partner at Unitus Ventures said in an interview. Mantha, whose VC fund has a sizable portfolio of investments in job-tech startups, said that increasing gig culture, tech and automation in HR operations, and availability of technology infrastructure are helping the vertical flourish. He also said the job-tech firms will not see consolidation in the short to medium term, and more players will join in. Edited excerpts:
Unitus Ventures is investing more in job-tech firms, what’s driving your investment theme?
When we started a second fund four years back, we did have a focus on edtech, job tech, fintech and healthcare themes. While we have seen opportunities in all of them, it turns out that the number of our investments and best opportunities are in the broad job-tech space. It overlaps with a segment of edtech, and partly with the digitization of micro and small firms.
We have invested in companies that are in HR management and also work with the vast blue and grey collar workers. There is a huge opportunity to use technology to organize this segment and create value for both the demand side and supply side. ‘Betterplace’ is one such firm we are invested in that manages HR and engages with companies to manage the lifecycle of employees. We invested in a company called Gig force, which focuses on gig workers for both short and long gigs. During the pandemic, employers are willing to have contract workers to manage costs. It offers opportunities to job-tech firms. Leaving the K12 space aside, businesses that focus on upskilling, training with a direct linkage to jobs are in our focus. We have invested in a company that trains in coding and guarantees jobs, and function via an income sharing model.
Are you scouting for more job-tech firms, or done with the portfolio?
As we speak, we are (scouting), and will do so for at least the next five years. Both in existing portfolio companies and new ones. We have some funds for follow on investments, and we shall go to the market for our next fund at a suitable time. No exact timeline, but we will, and job-tech will be an important theme for us.
How successful is the model of VC funding to organize the unorganized work, more so during a tough time?
For the next decade and a half, the single most challenging task for India is creating jobs. There are several layers to it–women labour force participation is low, SMEs (small and micro enterprises) who employ millions have productivity concerns. We believe, through such investments, risk capitals, and entrepreneurship, the sector will grow. It adds value to both sides–the corporates and the workers. These firms and platforms are bringing transparency, and also will be instrumental in implementing government policies. The availability of KYC, UPI, Aadhaar, smartphones, linked bank accounts and we have technology infra available to create platforms that can organize a workforce.
As an early-stage VC fund, how long you are staying invested?
We invest early, make them grow, and then help crowd in more funds for later-stage growth funding—from big pockets. Once we write a cheque and take 1% of the stake, we stay invested at least for the next two rounds of investments. Unless we are able to give jobs to people, other gains we have made in the country will collapse. We have to make sure that future funds stay invested in good companies for pro-rata rights.
Do you see, consolidation happening in the job tech space as well?
We don’t see consolidation happening immediately…new leaders are emerging. The market share of large players in this space is very small, the vast majority of job market is fragmented. Companies, which are looking small now will scale up significantly. This job-tech space is going to be a fertile area and you will see sector specialization emerging from it.
What’s the SoP while selecting job-tech firms?
As an early-stage venture fund, our job is to identify opportunity and take risk by realizing the potential before anyone else have even seen them. Over a period of time, these firms build significant value. For example, when we invested in ‘Betterplace’ it was at best a three-to-four-million-dollar firm, but today, fast forward five years, it has grown many folds.
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