Accel seriously reconsiders investing in early-stage startups in India

Accel is one of India’s top venture capital firms by any measure. With nearly two dozen Indian unicorn startups, including several industry leaders, Accel’s track record speaks for itself. Yet the partners leading the company’s early-stage accelerator program, called Atoms, were uncharacteristically reflective about the lessons they learned and the changes they implemented to improve their odds of success.

“One of our fundamental beliefs is that at some point, all venture capital firms look the same to the founders. It’s just money,” Accel partner Prayank Swaroop said in an interview.

In recent years, all venture capital firms have also increasingly focused on making early-stage investments in India and looking for the next Flipkart at the seed stage. This shift is largely driven by the realization that India is not generating many multi-billion dollar exits, making it imperative for VC funds to step in early to significantly improve returns.

For nearly five years, Accel has struggled to find the right fit for its early-stage accelerator program. Before launching Atoms, the venture capital firm explored building knowledge and community repositories through Seed to Scale and continues to build on that foundation.

“We held a demo day and we tried to be very similar to a lot of other funds,” says Swarup (pictured above).

As Fast Accel tries, it also abandons some practices. For example, it no longer attempts to create connections between Atoms portfolio startups and other investors. Swarup recalls a conversation with a founder who told him that investor meetings felt like they were putting the startup on the running track to artificially impress other potential backers. on board.

Another candid feedback from founders revealed that many are reluctant to engage with industry peers who are years ahead of them. “We’re trying to find our own unique path and what’s worked for some other companies, and we don’t think it’s going to work for us,” he said.

This is what the path looks like. With just eight startups, Atom’s third cohort is significantly smaller than other well-known accelerators. All selected startups operate in two areas: artificial intelligence and Industry 5.0 (smart manufacturing).

Accel invests up to $500,000 in pre-seed rounds in carefully selected startups with no cap on valuation. In addition to helping startups strategize, Accel also helps them connect with industry players who can become potential future partners and customers.

More on this later, but first, Accel’s third group:

Spintley
Spintly is an IoT platform that simplifies access control for commercial and residential buildings. Unlike traditional systems, Spintly uses a distributed IoT architecture and edge computing technology, eliminating the need for heavy back-end infrastructure and enabling users to conduct access control via smartphones. Spintly has eliminated 200,000 plastic badges and 2,000 miles of wired infrastructure and currently serves more than 300 customers and 4,000 doors.

assets
Canada-based Asets has launched the first cloud-based integrated design suite powered by artificial intelligence, a multi-disciplinary CAD, simulation and engineering design platform that helps engineering, procurement construction (EPC) and end-owner companies accelerate their Early stage projects – stage engineering increased by 10 times. Customers benefit from rapid deployment of engineering resources, reducing work time and costs associated with engineering projects.

Tuning Artificial Intelligence
Tune AI is a GenAI stack for the enterprise, offering solutions including Tune Chat, an AI chat app with over 180,000 users and powerful models for text, code generation and brainstorming, and Tune Studio, a user-friendly Comprehensive solution for fine-tuning, deployment and deployment). Manage Gen AI model lifecycle and achieve data security with enterprise-grade compliance.

Scoob
Skoob is a generative artificial intelligence platform that is revolutionizing the way readers interact with books. Rather than skimming the entire volume, we harness the power of artificial intelligence to dissect the book into topic-focused sections. We are making knowledge consumption intuitive and user-friendly.

Ali Vihan
Arivihan is India’s first 100% automated learning platform based on artificial intelligence that provides every unique school student with a personal tutor for Rs 300 per month to guide them in planning exams, teach them through video lectures, talk to them, solve their Questions are immediately queried and their knowledge is validated by testing and improving it at any time and at the desired speed.

merit
Merritic is the storytelling co-pilot for financial planning and analysis (FP&A) teams, automating reporting and business analysis. Merritic combines the power of knowledge graphs and language models to perform highly contextual analysis, gather qualitative insights, generate relevant commentary, and automatically create financial decks.

(Two startups in this group remain under wraps for now.)

Barath Subramanian, another partner at Atoms, said Accel carefully selected artificial intelligence and Industry 5.0 as topics for Atoms because the company believes these two areas will become even bigger in the next 10 years.

Industry 5.0 has emerged as a key theme as aging factories in India and elsewhere are finally modernized, Subramanian said, paving the way for startups that are improving efficiencies from the data that flows annually to consulting firms and other companies. Get a piece of the tens of billions of dollars. industry. “These plants generate a lot of data, but it hasn’t been used until now,” Subramanian said.

The industry has also benefited from New Delhi’s push and incentives to attract foreign companies to expand their manufacturing base in the country, as well as a growing “China+1” shift among global giants.

More than 800 startups have applied to join Atoms 3.0, of which about 300-400 applicants are artificial intelligence startups. Swarup said nearly two-thirds of the pitches were focused on AI startups looking to solve HR and marketing problems. “There’s so much noise in the market that it’s a signal to us that we should look elsewhere,” he said.

“In addition to capital and learning sessions, being part of Atoms provides us with a strong community of founders and a highly collaborative peer group – for example, when we are faced with a challenge at Meritic, we can turn to any of the other teams at Accel LaunchPad for help, This Is Our Place Meritic co-founder and CEO Pallavi Chakravorty said in a statement:

“Founders Anonymous helps us open up to everyone in an unfiltered way, and GTM talks are critical in shaping our B2B sales thinking.”