ET Tech | January 8, 2019
Early-stage venture capital fund YourNest will invest in edge computing and patent-led startups in 2019.
Sunil Goyal, its managing director, told ET that the firm has already identified some such startups and is hunting for more, as he believes the next wave of growth in startups will be in this sphere.
This year, YourNest expects 10 of its portfolio startups to raise about Rs 700 crore in funds, Goyal said. These 10 companies are Mompresso, Rubique, Aaha Stores, CoveIoT, SmartQ, pCloudy, Emotix, GolfLan, Uniphore Software, and Arya.ai.
According to Goyal, the investment wave in the period 2012-14 was in global internet, then came the 2014-16 period which was about software as a service, and in the last two years (2017,18) it has been largely internet of things (IoT) and robotics.
“Now, going forward, all the three areas will continue but the next big things would be edge computing and patent-led in the startup space in India,” said Goyal.
According to Goyal, customers and enterprise customers are now looking forward to decision-making happening in milliseconds. And if the decision-making has to happen in milliseconds, all the computing power has to be there in the sensors, at the level where data is being captured. Many real-time use-cases require intelligence to be built at the edge itself, instead of the cloud, he said.
“Apparently, Jeff Bezos had given the Alexa design team a one-second latency (time taken to respond to a query). While this may be acceptable for a consumer product, but a millisecond can often make the difference between life and death in an autonomous vehicle,” Goyal said.
According to Goyal, YourNest will be looking to invest in companies where computing can happen on the edge and such companies could be in healthcare, defence, cybersecurity or other such spaces that involve mission-critical activities.
He said YourNest has already identified a few such startups in India. “I won’t be able to disclose about this, but I can say that things have already started on those lines, and we may see those kinds of companies coming up in the next few years,” said Goyal. “Right now, the developments are happening, the chips are being designed, and the processing power has to be enhanced…”
In the western market, the last few years have seen funds flow into edge computing startups—Porsche invested in Anagog, Softbank has backed Packet.inc, Berkshire Partners has backed Vopor.io, and Cambridge Innovation Capital has invested in Swim.ai.
According to CB Insights, the global edge computing market is expected to hit $ 6.5 billion by 2022, growing at a rate of 41%. And globally, almost all top-tier VC funds, like Andreessen Horowitz, Softbank, GE Ventures, Saudi Aramco Energy Ventures, Berkshire Partners, Goldman Sachs, and Crown Castle, have invested in edge computing tech.
On YourNest’s portfolio startups that are expected to raise close to $100 million (almost Rs 700 crore) in funds, Goyal said, “Most of these 10 companies have revenue size between $2 million and $10 million. And it will be a mix of Series A and Series B fundraising.”
YourNest, founded in 2012, has so far invested in 22 tech-enabled businesses.