VC firm Bertelsmann India to invest in up to four startups in next 12 mths

 Eyeing a return to pre-Covid investment levels, mid-stage venture capital firm Bertelsmann India Investments (BII) is targeting to make bets on two to four startups in the next 12 months with an average ticket size of $10 million.

“We will also do another 3-5 follow-on investments in our current portfolio next year,” said Pankaj Makkar, managing director, BII. While the VC fund did not make any new investments this year, it made 7-8 follow-on investments in its current pool of portfolio companies such as Shiprocket, Licious, and Lendingkart.

The strategic investment arm of the German multinational conglomerate, Bertelsmann, focuses on Series B and Series C stage investments.

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“Of 11 of our portfolio companies in India, about 6-7 could become Unicorns in a couple of years. We are waiting for some of these success stories to emerge after which would start exiting some of them in the next 3-5 years,” said Makkar. BII had earlier exited music streaming service Saavn and short video platform Roposo.

One of its portfolio companies Eruditus, which has been backed by the Chan Zuckerberg fund, has a current valuation of $800 million and could join the Unicorn club by next year. “Licious should become a Unicorn in the next 18 months as well,” said Makkar.

Unlike early-stage VCs which invest in several companies, BII has reserved its bets for a few startups. “The risk of companies changes dramatically from series A to B and the way we evaluate them is different from how early-stage funds do,” Makkar said.

The company has also added a new filter while making investment decisions from now on. It will see if Covid-19 has affected a sector in a negative or positive way and take that into account before taking the final call. According to Makkar, edtech and healthtech will continue to grow in the next year too.

Jan to Sep VC investments down nearly 17 per cent YoY to $6.5 billion

 Venture Capital investments dropped by around 17 per cent during January to September 2020 to $6.5 billion from $7.9 billion, last year. The funding was led by education, real estate and fintech. Investors say investment activity will increase in the coming months as Covid-19 has opened several new and first time opportunities for startups with fast changing consumer habits. Fintech, edtech and consumer driven startups are likely to raise more funds and grow faster.

Venture Intelligence data shows, with nearly $1 billion fund raise, Byjus Classes topped the table in 2020. The company raised the money in four tranches from various investors including TPG Capital, Tiger Global, ChrysCapital, Silver Lake, Owl Ventures, Sands Capital, General Atlantic and others. Oyo Rooms raised $507 million from SoftBank Corp. Unacademy raised raised $153 million from SoftBank Corp, IIFL VC, Nexus Venture Partners, Sequoia Capital India, General Atlantic and others. TPG Capital, Tiger Global, ChrysCapital, others have invested $ 225 million in Dream11.com and Samsung Ventures, Korea Investment Partners, Wellington Management, Naspers, Tencent and others $153 million in Swiggy.com.

Education topped the table with nearly $1.755 billion as against $379 million last year, followed by real estate which received $754 million as against $242 million, followed by Fintech $730 million ($1224 million), E-commerce $571 million ($2321 million), Food $522 million ($517 million), Healthcare $433 million ($577 million) and Logistics $366 million ($875 million), according to Venture Intelligence data.

Apoorva Sharma, co-founder and President, Venture Catalysts said, India is currently the third largest startup hub in the world and continues to attract a lot of VC and PE investors due to its comparatively faster growth rate, population and young demography. The country is home to over 50,000 startups and 34 unicorns that itself speak volumes about the high investor sentiment in this country’s startup ecosystem.

"We expect the investment activity to heighten in the coming months as Covid-19 has opened opened several new and first time opportunities for startups as the consumer habits are fast changing. Fintech, edtech and consumer driven startups are likely to raise more funds and grow faster. We also expect a new found interest from the investors in the SaaS segment as more and more businesses are looking to move online and adopt digitalisation following the Covid debacle," said Sharma.

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Pranav Pai, Managing Partner at 3one4 Capital added, growth capital has certainly resumed taking positions across sectors over the last quarter.

"We are observing a significant flight to quality now, and the top companies in every segment being tracked by global investors in India are seeing renewed inbound interest. The pandemic has acted as a universal filtering event and companies that are coming through stronger - with better utilisation, greater growth rates, higher margins, and increased staying power - are able to close funding rounds much more efficiently than before," said Pai.

The digitisation of these segments has accelerated measurably, and this is the trend being captured by the market-leading startups. If these companies are able to sustain market share post this expansion and establish their new positions quickly, this could end up becoming a defining moment for most of them.

Most of the growth sectors that have benefitted from this acceleration - consumer services such as groceries, select consumer brands, edtech, SaaS, payments and fintech infrastructure, gaming & entertainment, etc. - will be the beneficiaries of this investment interest. The acceleration of growth and a clearer path to scale economics (revenue, margins, and sustainability) are the more important drivers of this interest, added Pai.

Venture Highway raises $78 mn to fund early-stage tech companies in India

Early stage venture capital firm Venture Highway on Thursday said it has raised $78.6 million for its second fund focused on technology seed investments in India. The fresh raise will be used for new investments in 30 early stage companies over the life of this fund.

Backed by iconic investors from Silicon Valley, the average cheque size for this fund is expected to be $1 million.

“We are extremely passionate about helping advise technology entrepreneurs build their businesses with our local and global networks,” said Samir Sood, Founder, Venture Highway.

Sood, who is a former top Google executive, founded the the Delhi-headquartered fund with Neeraj Arora, former Global Business Head at WhatsApp, in 2015.

With portfolio companies such as Meesho, Sharechat, Moglix, and Cars24, the early-stage investment firm has so far invested in 20 start-ups.

“Our goal is to give back to our country’s early-stage ecosystem and we continue to be extremely excited about the quality of the current generation of entrepreneurs building large businesses out of India,” said Sood.

Venture capital firm Jungle Ventures raises $240 million for third fund

Jungle Ventures, one of Southeast Asia’s largest early-stage venture capital firms, closed its third fund, Jungle Ventures III by raising a total of $240 million. It includes $40 million raised in separately managed account commitments, for investments in innovative technology and digital-driven consumer businesses across Southeast Asia.

Investors range from endowments, funds of funds, and development financial institutions to strategic family offices and leading technology players. These include DEG, Germany’s development finance institution, IFC, a member of the World Bank Group and Bualuang Ventures, a corporate venture capital fund of Bangkok Bank. Dutch development bank FMO, Cisco Investments and Singapore’s Temasek are other investors in the fund.

“We continue to be focused on Southeast Asia and India. We take concentrated bets and are carefully looking for market-leading companies in India which have an opportunity to scale their business into Southeast Asia and globally,” said Jungle Ventures co-founder and managing partner Anurag Srivastava. “Seven of our early-stage investments from our second fund, Jungle Ventures II, have grown to over $2 billion in portfolio valuation, up more than 10-fold over the last 4 years. This is noteworthy because we make only 10 to 15 key investments in each fund and no single company is responsible for delivering a disproportionate share of this growth,” added Srivastava.

Jungle mainly invests in three verticals which include consumer brands for the digitally native, digital platforms for transforming small and medium enterprises and global technology companies born in Asia. Some of Jungle's notable investments in India include Livspace, Moglix, PaySense, Engineer.Ai, Tookitaki and Klinify.

Jungle raised more than double the amount of its previous fund, Jungle Ventures II (2016), with nearly 60 per cent of committed capital coming from outside Asia. More than 90 per cent of the capital came from institutional investors spanning North America, Europe, the Middle East and Asia, with new investors accounting for nearly 70 per cent of the fundraise and returning investors for the rest.

“The traditional view of Southeast Asia is that it’s a fragmented region of countries with more differences than similarities,” said Amit Anand, co-founder and managing partner of Jungle Ventures. “Thanks to rising internet penetration, demographic shifts and mobile-technology adoption over the last decade, the region is now home to a fairly homogenous addressable market of more than 250 million cyber-sophisticated young people compared to any ‘developed’ market. We saw the tide shifting and focused on companies that demonstrated an early leadership position in one market,” he said. “Then we supported these companies with capital, expertise and resources to help them become regional category leaders.”

Jungle Ventures was the earliest institutional investor in a number of category leaders in Southeast Asia. These include travel and hospitality startup RedDoorz, fashion e-tailer Pomelo Fashion, online consumer lending and payments platform Kredivo and software firm Deskera.

In the past, Jungle has got at least six exits from its portfolio firms including mobile marketing company Zipdial which was acquired by Twitter and travel company Voyagin which was bought by e-commerce firm Rakuten.

Social commerce player DealShare raises $11 mn from Matrix Partners, others

Venture capital (VC) company Matrix Partners India has led $11-million Seed and Series A investment rounds, jointly with Falcon Edge, in social commerce start-up DealShare. The investment also saw participation from partners of DST Global, Omidyar Network, besides other leading angel investors.

DealShare focuses on grocery and home categories targeted at the middle- and lower-income clientele in Tier-II and -III cities. It currently has more than 300,000 customers in Jaipur, Ahmedabad, Surat, Baroda, Kota, Jodhpur, Ajmer, Sikar, Sawai Madhopur and Nagpur, and plans to launch in some cities of Maharashtra by the end of this month.

The company will use the freshly-infused capital for expansion, developing artificial intelligence (AI)-based solutions, and growing an indigenous logistics network.

Vineet Rao, chief Executive Officer, head of technology, and a former Microsoft professional, said DealShare was in the process of creating the biggest e-commerce story of India. “E-commerce 1.0 focused on bringing the western model to the country and brought in a lot of investments and infrastructure. But those models were mostly focused on top-tier population in metros. Indian consumers in Tier-II cities and smaller towns have long missed out,” he said.

DealShare sources products directly from local manufacturers and suppliers and offers deep discounts on them while allowing buyers to gain further price reductions when they engage in group buying with friends and family members.

The company also focuses on a gamified user experience, with a demand aggregation-based consumer to business (C2B) model, as well as a multi-modal logistics model to serve this segment profitably. It is currently clocking a 50 per cent month-on-month growth rate and servicing over 15,000 orders per day.

DealShare was founded in 2018 by Rao and four other entrepreneurs — former Metro Cash & Carry sales head Sourjyendu Medda, Myntra co-founder Sankar Bora; former Grofers V-P operations Rishav Dev, and former FoodPanda chief product officer Rajat Shikhar.

Announcing the Maharashtra launch, Sourjyendu Medda, chief business officer and head of sourcing, added that the company had serviced more than 1.5 million orders from 300,000 consumers in just one year of operations. "We focus heavily on simplified user interface, local language, social virality and local supplies. These pillars allow us to penetrate deeper into smaller cities and towns like no e-commerce or modern trade company has done before. With start of operations in Maharashtra and other states, and further penetration into Rajasthan and Gujarat, we are confident of hitting a 5 million customer base in six months," he added.