Kosha & CIIE.CO
CIIE.CO’s funding has helped Kosha protect their IP, deepen product development, access market connects, impact 300+ artisans in 6 months, and attract investment from other sources.
(Centre for Innovation, Incubation & Entrepreneurship)
Compulsorily Convertible Preference Shares
Compulsorily Convertible Preference shares (CCPS) are an equity-linked instrument, offering investors a fixed income and where shares compulsorily convert into equity shares after a period of time, as stated in the contract. CCPS are also anti-dilution securities and help founders manage their equity stake to retain control by having a substantial stake in the company.
50% - 50%
₹1 Cr - ₹1.99 Cr
($125,000 - $248,750)
NO. OF ARTISANS
Kosha leverages IoT to ensure traceability for artisanal products. Their innovative cookie-sized, sensor-activated device is fixed on the handloom or worn as a wearable and analyses the movement of the loom or the artisan’s gestures to authenticate handloom products — a key market need. A unique QR code that includes artisan information and location is embedded into a tamper-proof label stitched into every product, making it possible to trace the product’s route from weaver to customer.
Kosha's technology enables supply chain transparency and information access in the handmade sector, both of which are growing needs for ethical buyers and conscious consumers willing to pay a premium for transparent tech.
There is significant need and opportunity for cutting-edge technology in the artisan sector, but the system is currently not conducive for tech-based innovation. A small but growing cohort of enterprises are making the case for craft to take the tech leap of faith so scalability and product authenticity can be realised as opportunities. Migrating to open, transparent, efficient systems will enable faster scale and greater sector value.
Kosha is working to enable authenticity and integrity across the handmade supply chain. But they were bootstrapped and needed financing from investors in the impact space who could strategically support their vision in addition to investment.
Deep-tech solutions are prohibitively cost-intensive and demand huge ticket sizes that can absorb skyrocketing salaries of best-in-class software developers, long-drawn development cycles, market education, and building a recognisable industry standard similar to De Beers' Forevermark or hallmark certifications. These are mainstream business needs but demand patient, category-passionate investors willing to invest bigger ticket amounts without harbouring expectations of a quick exit and huge valuations.
“Because of deep tech where we have multiple technologies talking to each other, even product development is not very straightforward. It took us years just to stabilise the technology. It’s not as simple as creating a website on Shopify. We need patient capital to help us build new-age, tech solutions that will help address systemic issues in the sector.”
— VIJAYA KRISHNAPPA, CO-FOUNDER, KOSHA
When Kosha was in the market to raise capital for filing their IP, establishing a product-market fit, and developing their product and technology, there were few takers. They were looking for a minimum of ₹80 lakhs ($100,000).
CIIE.CO backs fearless entrepreneurs building disruptive solutions. As an incubator, they support and accelerate growth for innovative and tech-based startups. They provide non-dilutive, patient as well as venture capital to help startups pursue novel innovations, build stronger solutions and accelerate their growth trajectory. The incubator provides sector-specific support with a unique and robust hand-holding process.
CIIE.CO provided Kosha with ₹35 lakhs ($43,750) at ₹10 crores ($1.25 million) pre-money valuation through CCPS along with portfolio and mentoring support for 12 months.
Given the decentralised nature of the sector, the capital is primarily catalytic in nature, designed to be patient while Kosha arrives at their product-market fit. Since tech adoption was expected to be slow, subsequent targets for Kosha were set on a periodic basis. One such target is that they impact 100 artisans in the first three months of the investment, which Kosha were able to do successfully.
Kosha’s ambitious solution could radically transform the current system riddled with issues of inauthenticity, inefficiency and unfairness. But this transformation is going to take time and cost a lot of money. They needed an investor who understood and believed in their vision, had the appetite for the ticket sizes needed to iterate, develop and popularise the solution, and be patient over the time that it would take to achieve tangible impact in the market. If not for CIIE.CO’s catalytic capital, Kosha’s vision would have remained a pipe dream.
Thanks to CIIE.CO’s initial support, Kosha has gone on to raise additional investment to the tune of ~₹94 lakhs ($117,500) from Deshpande Foundation and another ₹10 lakhs ($12,500) from angel investors. Today, Kosha’s IoT devices are deployed in nine states across India as well as in Africa, supporting more than 300 artisans, spanning Government initiatives, co-operatives, and startups. The first 6 months post investment also saw a 12 times jump in sales.
“For CIIE.CO, a return of 5% - 10% on our investments is great. Out of the ₹20 crores - ₹25 crores ($2.5 million - $3.1 million) we plan to invest in promising startups, about 15% - 20% would be in the artisan sector. We would be happy with a 5% annualised return.”
— CHINTAN BAKSHI, PARTNER - INCUBATION, CIIE.CO
Untested solutions that need investors who can see the big picture and step in to de-risk innovation.
Features of catalytic capital in this case:
Patient: Understands the need to wait a few years before the technology evolves beyond its MVP (Minimum Viable Product) to become an industry default.
Experimentative: Puts faith in an innovative tech solution that only adds a few thousand users at a time and not millions per quarter in order to enable greater good and significant advancement in a sector.
High-Risk Appetite: Brings in additional investors and investment by taking on greater risk in the initial round of investment