In the last three years venture capital funds have committed over $ 1.1 billion in startups in the domestic electric vehicle industry looking at potential winners of the future. But with a host of these new age firms struggling to scale up, investors are now turning cautious. The hunt is now for companies that can actually deliver on the ground.
Hyderabad based bootstrapped firm Atumobile which is seeking to gain a foothold in the relatively neglected electric motorcycle segment says companies that display good execution capabilities and not just frontload numbers on an excel sheet, will be the big winners in future.
“I am definitely sensing that many people are being advised to be a little cautious. There are 150 startups in EV alone, and in most of the cases the investors are waiting and watching the deliveries,” said Vamsi Gaddam, founder and CEO, Atumobile. “I have a traditional thought process and want to show what I can create before sitting down for a discussion with the investors. I dont want to sit in a discussion where somebody offers INR 50 crore for 25% of the company. That is not my mindset.”
Atumobile’s targets for the first year are conservative just like its first product. The Atum 1.0 is a rugged looking low speed mobike with a battery pack of 1-1.2 kilowatt hour (KWh) and top speed of just 25 kph.
“In the first phase we are looking at creating a base of around 50,000 units or close to INR 100 crore in terms of business. After that we are chatting with various VCs but everybody is talking about EVs, and it is really about who proves the story on the ground,” Gaddam said. “Everybody is talking or pitching something but the company that can actually exhibit its prowess will be a proper success story.”
So we are trying in the second version right now to raise funds but to prove our product market fit, it works. Once we do that automatically we will get good backing.”
It plans to launch a second bike this year with a bigger battery pack–1.1-2.4 Kwh and a top speed of 67 Kph.
“Plan is to always go for higher speed. We have got a lot of feedback on the first bike on speed and sitting posture, which we have incorporated in the second bike,” he added. “It is aimed at proving its worth in the market. Once we do that, we will automatically get good backing (from investors).”
A lot of new found startups have been able to raise multiple rounds of funding even before launching products but have struggled to scale up in time that has led to delays and frustration from consumers. Gaddam says that is largely because companies have not understood the fundamentals of manufacturing.
“In the startup space the talk of scalability is more comforting in the software space. It is very easy with software but here you cannot just add more servers or put more people on the ground to scale up. It is not that simple,” he said. “In manufacturing the net losses of a factory or the displacement of a manufacturing product is completely different. You have to take into account the feedback from the market and the voice of the consumers needs to figure in your plan.”
Most have also focussed on the scooter segment even as in the traditional two wheeler industry, motorcycles have a much bigger market. It is that white space that Atumobile wants to fill alongwith a few others like TVS backed Ultraviolette and Bharat Forge funded Tork Motors.
“China is a big market for scooters and the Indian market has just followed that simply because of the supply chain in China. Anybody can make a few trips there and you will get whatever it takes to make a scooter,” he added. “But the interest for us from the start was not scooter but mobikes because the Indian market doesnt have many attractive bikes. The segment will continue to be big and we see a lot of opportunities there.”
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Without specifying the launch timeline for its first EV product for the country, the two-wheeler maker said that it will be able to share its e-scooter concept by FY23 end. While it is certain to launch e-scooters, the company shared its optimism about e-motorcycles in the big bike segment.
