The transition to electric vehicles (EVs) is happening, albeit gradually. While the timeline for the shift may not be easy to predict, a good deal of initiatives are already in place. From improved government policies in recent years to automotive giants working towards an ecosystem, EV journey in India has so far been promising.
EV startups gaining traction and attracting investments is a crucial factor to drive adoption. While VC investments have come into the ecosystem, they have largely been for fleet-based operations or ride-sharing, but Bengaluru-based Micelio is looking to change that with a focus on strengthening e-mobility infrastructure and technology at the same pace.
The Micelio Fund has a corpus of INR 140 Cr with a sole focus on startups in the clean mobility space. Founded in 2019 by Shreyas Shibulal, Micelio calls itself an agent of change and enabler of sustainable and scalable solutions for a cleaner, better mobility ecosystem with clear social impact.
The seed fund focusses on enabling innovation in clean energy and creating a sustainable mobility ecosystem. Micelio’s investment philosophy is to employ patient capital to grow companies and build a community that is focused on EVs to promote clean mobility.
Electric Vehicles: Micelio’s First And Only Choice
According to Micelio founder Shreyas Shibulal, electric vehicles were the most logical choice for Micelio because of his passion for sustainability, technology and everything auto. He also realised early on that India offers huge potential in the EV space — being such a large player in the overall automobiles market in the world.
“There was a need to build things that can have a long-term social impact reflecting in Micelio’s culture, right from the origin of the name Micelio which is the part of the organism that feeds the ecosystem while growing itself,” Shibulal told Inc42.
Micelio believes that the opportunity is so big that every player in the ecosystem can benefit from it and that a lot of Indian EV startups are providing India specific ideas and solutions for Indian problems. “They are not just importing solutions from out of the country into India. There is also a tremendous opportunity for us to cross leverage ideas across startups and put them in touch with each other,” he added. Like they always say, ideas are aplenty but only a VC fund can make them turn into reality.
According to the Electric Vehicle Market Outlook Report 2020 by DataLabs by Inc42+, the two main points of debate for EV adoption in India are the range of the vehicle and the charging infrastructure. When it comes to infrastructure, charging penetration cannot be the prerogative of companies alone — government intervention plays a critical role as well.
So far, FAME and other policies have been focussed on manufacturing, incentives and certification, whereas charging infrastructure is a more recent concern in the government’s policies. The state of charging infrastructure in India is such that as of 2018, India had approximately 650 charging stations compared to China’s 331K plus. “The EV ecosystem is yet to take shape. But when we see the half glass full, it also tells a story about the opportunity where automobile manufacturers can play a big role in filling the remaining half of the glass,” he said.
Betting On Market-Fit Products Over Revenue
The Micelio fund has received 175+ applications for funding so far. The company has studied 130+ of these applications and understood the market for the right startups. It has shortlisted 3-4 companies and has initiated diligence. The company expects to make an investment soon.
“Right now our focus is to invest in seed stage companies. We may be open to series A and pre-series as a co-investment opportunity,” he added.
Micelio groups startups into two categories – business and technical innovation. The company says it is not interested in funding a company that only needs capital to scale. “We are looking for startups with innovative solutions which have a proof of concept that is making a product market fit not necessarily that is making revenue. It is patient capital, there is a certain ROI expectation but is very different from existing VCs and their models for the EV space,” Shibulal said.
“It is patient capital, there is a certain ROI expectation but is very different from existing VCs and their models for the EV space,” said
Shibulal said that about 75% of the applicants fall on the tech innovation side, including individual components for EVs like powertrains, motors as well as fully-built EV vehicles. There are also some companies innovating in areas like SRM (switched reluctance motors), EV drones, EVs for water transport.
“While there are a few startups that have a good hold on the technical side of EV, the startup team may need help to take that idea to market or find a proper product market fit. This issue however is something that is evident whenever a new sector evolves,” Shibulal said.
One of the problem areas in the EV ecosystem, Shibulal said, is that the founders themselves don’t have much experience. Talking about other problems, Shibulal said that there are startups which have ideas of complete two and three-wheeler EV concepts and would need anywhere from $20-50 Mn to take those B2C EV ideas to market. These ideas are not something the fund is looking to back at the moment.
Referring to the bigger upside for charging infrastructure startups, Shibulal said, “Any pure charging infra company would not only have big capex requirements, but also would need enough usage of their stations. In today’s scenario – it’ll mostly happen if there is a captive EV fleet owned by the same company since there are not enough EVs on the road currently.”
Beyond Funding: Access To Infrastructure, Logistics & More
In addition to the fund, Micelio also has teams focussing on the current EV ecosystem to get a deeper understanding of what the industry needs through an EV fleet that is running pilots to understand last mile connectivity. Micelio has two key focus areas besides the fund:
- Micelio Discover Studio: An incubation space for startups focusing on EVs to collaborate and create products to drive the EV revolution.
- Lightning Logistics: Providing businesses and customers a seamless, last mile delivery and logistical solutions
On the product side, the company is looking at launching an EV of its own in the near future, tailored for last-mile logistics.
Micelio provides access to infrastructure and workshop space with the “Discovery Lab”, an incubation space to collaborate and create products to lead the EV revolution. It also operates Lightning Logistics – an intelligent data-driven logistics last-mile delivery company with a customer focus and a great place to work for driver captains. Lightning Logistics is a B2B last mile logistics partner powered by EV fleet delivering on the promise of cleaner, faster & reliable solutions.
Lightning Logistics last mile delivery service is backed by technology, training & data ensures reliable, on-time delivery. As a logistics partner with its all-EV fleet, it helps organisations gain carbon credits and improve on their ecofriendliness. It operates across four broad verticals: ecommerce, grocery, couriers, retail or kirana stores. “We are currently in the pilot stage that will involve Bengaluru, Chennai and Hyderabad across four major clients. Here the riders and scooters are working for actual customers gathering a host of data/insights that we can give back to the customers,” he said.
The company is utilising data from two perspectives – IoT sensor-based data giving information like battery temperature, speed, voltage, amperes. It also uses rider data such as when the driver checked in, their location, cash or wallet balance, bike model and other data.
Shibulala said riders are currently using an app designed by the company to track these details. “In the last 10-15 years, delivery has been about taking goods from point A to point B. At Lightning Logistics, we will be using data to make the delivery process more efficient – from an internal efficiency perspective as well as external client-facing efficiency perspective. We are looking to grow our lightning logistics fleet, experiment with different categories of vehicles and establish a diversified client portfolio. We are also progressing well on building an EV form-factor for last-mile delivery.”