Arkam Ventures is betting big on the future, expanding its focus beyond digital tech to include electric vehicles and manufacturing in its second venture capital fund. The $180 million fund, led by managing director Bala Srinivasa, adopts a multi-fund thesis, strategically weaving together sectors unified by the digitization theme.
In a significant move, Arkam Ventures has already dipped its toes into manufacturing, spearheading a $6.3 million Series A funding round for Karkhana.io, a custom manufacturing platform. The collaboration with Susquehanna Asia Venture Capital marks Arkam’s inaugural foray into the manufacturing landscape, showcasing a keen eye for transformative ventures.
Karkhana.io, the recipient of Arkam’s investment, specialises in contract manufacturing across diverse categories, including product assembly and localization. Srinivasa emphasises the pivotal role technology plays in enhancing transparency, visibility, and overall quality in the manufacturing sector.
The allure of the manufacturing realm lies in its unique challenges—long gestation periods and formidable barriers to entry. However, Srinivasa underscores the inherent customer stickiness, a trait that sets manufacturing startups apart from their tech counterparts. Convincing investors to stay the course is a nuanced game, and Arkam Ventures appears well-positioned to navigate these intricacies.
The current landscape favours manufacturing startups, buoyed by investor interest and favourable tailwinds such as rising domestic demand and the ‘China Plus One’ strategy. As global dynamics shift, the ‘China Plus One’ approach encourages companies to diversify their sourcing, opening avenues for Indian businesses to emerge as significant players.
Srinivasa sheds light on the imperative role of digital platforms in the manufacturing sector, citing three key challenges faced by small businesses—sourcing demand, capital constraints, and underutilised capacity. With an average factory in India operating at 30-40% unused capacity due to demand-supply disparities, digital platforms become catalysts for connecting businesses with untapped potential.
The narrative painted by Arkam Ventures transcends mere investment; it is a strategic commitment to catalysing change in traditional sectors. The allure of manufacturing, coupled with a keen understanding of the sector’s nuances, positions Arkam Ventures as a torchbearer for transformative investments in the evolving landscape of venture capital.
Q1: What is Arkam Ventures’ second venture capital fund focused on?
A1: Arkam Ventures’ second fund spans various sectors, including fintech, skilling, software-as-a-service, logistics, food agriculture, manufacturing, and electric vehicles.
Q2: What was Arkam Ventures’ first investment in the manufacturing space?
A2: Arkam Ventures marked its debut in manufacturing with a $6.3 million Series A funding round in custom manufacturing platform Karkhana.io.
Q3: Why did Arkam Ventures expand its focus to manufacturing and EVs?
A3: Arkam Ventures recognizes the urgency and potential in manufacturing and electric vehicles, aligning with the evolving demands of the market.
Q4: What challenges do manufacturing startups face?
A4: Manufacturing startups confront long gestation periods and entry barriers, but Arkam Ventures sees high customer stickiness and potential for growth.
Q5: Why is the environment favourable for manufacturing startups?
A5: Investors’ interest, rising domestic demand, and the ‘China Plus One’ strategy create a conducive environment for manufacturing startups.