We are scouting to invest more in job-tech firms: Unitus Ventures

The early-stage venture fund Unitus Ventures is looking for further investments in job tech companies and will continue to invest in this industry for at least the next five years. India's employment crisis and drive to move from informal to formal work creates a great opportunity for new entrepreneurs and makes it a major investment topic, said Surya Mantha, senior partner at Unitus Ventures, in an interview. Mantha, whose VC fund has a sizeable portfolio of investments in job tech startups, said the increasing gig culture, technology and automation in HR operations, as well as the availability of technology infrastructure, are helping the industry thrive. He also said that job tech firms will not see any consolidation in the short to medium term and that more players will join in. Edited excerpts:

Unitus Ventures is investing more in job tech firms, what's driving your investment theme?

When we launched a second fund four years ago, we had focused on edtech, job tech, fintech and healthcare topics. While we've seen opportunities in all of them, it turns out that most of our investments and best opportunities are in the broad field of job technology. It overlaps with a segment of Edtech and partly with the digitization of micro and small businesses.

We have invested in companies that are engaged in human resource management and also work with the large workers and employees. There is a great opportunity to use technology to organize this segment and create value for both the demand and supply sides. 'Betterplace' is one such company we are invested in that manages HR and works with companies to manage employee lifecycle. 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 hire contract workers to manage costs. It offers job tech firms opportunities. Apart from the K12 area, companies with a focus on further education and training with direct job reference are in the focus of our interest. We have invested in a company that provides training in programming, guarantees jobs and operates through an income-sharing model.

Are you looking for more job tech companies or are you done with the portfolio?

As we speak, we are (scouting) and will do so for at least the next five years. Both with existing and new portfolio companies. We have some follow-up funds and will be launching our next fund at a convenient time. Not a specific schedule, but we will, and job tech will be an important issue for us.

How successful is the VC funding to organize the disorganized work, even more so at a difficult time?

For the next decade and a half, India’s biggest challenge will be job creation. There are several levels - women's participation in the labor force is low, SMEs (small and micro-enterprises) employing millions have productivity problems. We believe that through such investment, venture capital and entrepreneurship, the sector will grow. It offers added value to both sides - the company and the employees. These firms and platforms provide transparency and will also be vital in the implementation of government policies. The availability of KYC, UPI, Aadhaar, smartphones, linked bank accounts and we have technology infra to create platforms that can organize a workforce.

How long do you stay invested as an early-stage VC fund?

We invest early, let them grow and then help to mobilize more funds for future growth financing - from large pockets. Once we write a check and take 1% of the stake, we stay invested for at least the next two investment rounds. If we are unable to give people jobs, other gains we have made in the country will collapse. We need to make sure that future funds stay invested in good equity companies.

Do you see that consolidation is also taking place in the job tech area?

We don't see consolidation happening right away ... new leaders emerge. The market share of the big players in this area is very small, the overwhelming part of the labor market is fragmented. Companies that look small now will grow significantly. This job tech room will be a fertile area and you will see how it translates into an industry specialization.

What is the SoP in Choosing Job Tech Firms?

As an early stage venture fund, our job is to identify opportunities and take risks by recognizing the potential before others have even seen it. Over time, these companies build significant value. For example, when we invested in Betterplace, it was a $ 3-4 million company at best, but now, five years later, it's gotten a lot of wrinkles.

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