In October 2020, Chara Technologies Pvt Ltd approached IIMA Ventures, a leading start-up incubator in India, for seed funding of INR 50–60 million. Bhaktha Keshavachar and Ravi Prasad had founded Chara Technologies with the aim of producing a new electric motor that would be free of permanent magnets and would be built on the principles of switched reluctance motors. In their pitch to the Investment Committee (IC), the founders emphasised three aspects of their technology venture. First, as the design did not require the use of permanent magnets, it would be significantly cheaper than alternative designs. Second, the rare-earth-free design due to the elimination of magnets made it a valuable green initiative. Finally, the local design and manufacturing of electric motors for the electric vehicle segment in India aligned well with the government’s initiative to increase India’s self-reliance and decrease the country’s dependence on Chinese products.

Although the technology venture was at the confluence of multiple investment themes, the IC sensed that Chara’s business model would encounter several serious challenges. The IC had to make a decision—should it invest in the start-up, or not?