According to reports, the Securities and Exchange Board of India (SEBI) has suggested giving investors more freedom to co-invest with alternative investment funds (AIFs). According to a media report, the regulatory board recommended lifting the ban on AIF investment managers offering advisory services for listed shares.
To put it simply, co-investment mainly enables the fund to concentrate on areas other than ticket size and portfolio management. Co-investments are typically offered by funds when an investment is too big to fit within the fund or to preserve control over an investment and foster ties with their LPs, who will be tapped for future fundraising.
Moreover, AIF is a privately pooled investment vehicle that collects money from investors in accordance with a predetermined investment policy and uses it as capital for the investors’ advantage.
According to the research, under specific circumstances, it has been suggested that managers of AIFs be permitted to provide co-investment opportunities to AIF investors through the co-investment vehicle (CIV) model.
Separate CIV Scheme for Each Investment
Additionally, it stated that, in accordance with the shelf PPM for the CIV scheme submitted to the markets regulator, a distinct CIV scheme ought to be introduced for every co-investment in the prospective business being considered for investment under notification to SEBI.
Up until now, co-investors were required to sell their shares at the same time as AIF on the same conditions and exit price, which limited investor flexibility and made the funds seek to loosen these regulations.
The change follows calls from venture capital and private equity firms to loosen co-investment requirements in the AIF route starting in 2022. In the meantime, SEBI loosened its regulations in February, allowing AIFs to retain their investments in dematerialised form as of July.
This is revealed at a time when SEBI is continuously changing the AIF industry’s framework in response to input and difficulties. In September of last year, the regulatory body changed its framework for valuing AIF investment portfolios.
It stated that securities that were not listed, non-traded, or thinly-traded would be valued in accordance with the current mutual fund regulations (SEBI (Mutual Funds) Regulations, 1996).
Investor Awareness Gets a Boost with SEBI, Ministry’s ‘Niveshak Shivir’ Rollout
A strategic planning conference for the Niveshak Shivir project is held in Mumbai by SEBI and the Investor Education and Protection Fund Authority (IEPFA), which is part of the Ministry of Corporate Affairs.
Niveshak Shivir is a national investor support programme designed to increase financial literacy, lessen dependency on middlemen, and make it easier for investors to recover unclaimed profits and shares. Investors will be able to communicate directly with corporate representatives and Registrars and Transfer Agents (RTAs) for end-to-end support through the initiative’s dedicated helpdesks.
Later this month, the “Niveshak Shivir” programme will be launched in Ahmedabad and Mumbai, with ambitions to spread to additional cities with significant amounts of unclaimed investor assets.
One of the biggest technology investors in the world, Prosus, is increasing its position in the home services platform Urban Company by almost double. The Netherlands-based investor wants to increase its holdings before the business goes public early next year.
According to a media report, Prosus, which has funded some of the largest startups in the nation, including Swiggy, Meesho, and Eruditus, among others, will be investing roughly $30 million in an all-secondary transaction, providing Bessemer Venture Partners a partial exit. The deal will be closed at a fixed valuation of $2.6 billion. Note that secondary transactions usually occur at significantly lower valuations.
Accel Partners and Elevation Capital
Two of Urban Company’s initial investors, Accel Partners and Elevation Capital, sold a portion of their shareholding to Dharana Capital in July in an all-secondary deal valued at approximately INR 400 crore. The sources claim that while both companies were thinking about selling additional stakes, they have now shelved those plans and will wait for the company’s IPO the following year.
Even the possibility that Steadview was considering a sale is unfounded, according to a media report. Only Bessemer is offering the biggest portion and minor secondaries for Elevation and Acceleration. The report went on to say that Urban Company is one of the few good assets and that Prosus has an opportunity to take full advantage of it by doubling down its investment, and watch its valuation rise at the IPO the next year.
India’s Venture Capital Landscape
Recent trends in India’s venture capital scene indicate that when their initial fund cycles are coming to an end, early-stage VCs are choosing to quit their portfolio businesses. In April, The CapTable published a detailed article about how venture capitalists (VCs) were seeking to sell their holdings in secondary transactions.
However, Prosus’ decision to raise its ownership in Urban Company follows a significant multi-hundred million-dollar profit from its investment in Swiggy, a rapid commerce and food delivery company getting ready for an IPO later this year. Despite suffering large losses on two of its largest Indian assets, Pharmeasy and Byju’s, Prosus is now focussing on growing its other purportedly profitable businesses. Prosus also wants to expand the scope of its holdings outside of tech ventures. Prosus made a $100 million investment in Vastu Housing Finance in September. It also planned to spend about $40 million on the jewellery platform Bluestone.
The Urban Company was founded by Abhiraj Bhal, Raghav Chandra, and Varun Khaitan about ten years ago. It last received main funding in 2021 from a variety of investors, including Prosus, Steadview, Dragoneer, and Tiger Global Management. At the time, the corporation was worth $2.6 billion. It has started discussions about an IPO with a few investment institutions.
The government of Rajasthan and Tata Power, the biggest integrated power firm in India, have inked a Memorandum of Understanding (MoU) for a substantial investment of INR 1.2 lakh crore to overhaul the state’s electricity industry.
Senior Rajasthani government officials, together with Chief Minister Bhajan Lal Sharma and Col Rajyavardhan Rathore, the state’s minister of industry and commerce, witnessed the signing of the Memorandum of Understanding during the Rising Rajasthan Investor Meet in New Delhi.
With investments in manufacturing, transmission, distribution, nuclear power, rooftop installations, EV charging, and renewable energy projects, the 10-year investment plan seeks to support Rajasthan’s transformation into a power surplus state that offers a clean, affordable, and dependable power supply around the clock.
“Tata Powers’ investment in Rajasthan is a pivotal step to enhance the energy infrastructure. It is a step towards a future where electric mobility solutions are not just a vision but a reality, especially for e-rickshaws. This investment will significantly enhance the energy infrastructure by providing access to reliable, and affordable charging infrastructure. This step is aligned with India’s vision of achieving the electrification goal and it will not only drive higher EV adoption but will also have greater economic benefits including job creation and the growth of ancillary industries such as battery production and EV parts manufacturing. We are confident that this game-changing investment will certainly accelerate the adoption of electric vehicles and empower manufacturers, end users, and local economies alike,” stated Nitin Kapoor, Managing Director, SAERA Electric Auto Ltd.
Emphasis on Sustainable Energy Sources
Roughly INR 75,000 crore, or a large amount of the investment, will go into renewable energy projects. In multiple regions, including Bikaner, Jaisalmer, Barmer, and Jodhpur, Tata Power intends to create 10,000 MW of renewable energy capacity. This comprises hybrid energy projects with 4,000 MW and 6,000 MW of solar electricity. India’s capacity to manufacture solar modules domestically would be strengthened even further by this MoU, which calls for the construction of a 2,000 MW facility in Jodhpur.
The collaboration between Tata Power and the Government of Rajasthan, according to CEO and MD Dr Praveer Sinha, is evidence of the companies’ common goal of creating an integrated, low-carbon energy ecosystem in the region. The company wants to help Rajasthan achieve its energy goals and give its citizens access to economic possibilities by leveraging Tata Power’s knowledge throughout the whole power sector value chain.
Modernizing the Power Grid’s Transmission and Distribution Systems
In addition to renewable energy, Tata Power has made a large financial investment in Rajasthan’s electricity infrastructure modernization. To update the state’s distribution systems and lower energy losses while raising power quality, the business intends to invest INR 20,000 crore.
To improve transmission infrastructure, an extra INR 10,000 crore has been set aside. It is anticipated that these investments will increase the energy grid’s dependability in the state and guarantee that businesses and homes will always have access to cheap, clean power.
Focus on Electric Vehicles and Solar Panels for Homes
By investing INR 1,000 crore to build 1 lakh electric vehicle (EV) charge stations throughout the state, Tata Power also intends to assist Rajasthan’s shift to electric mobility. This will be crucial in lowering carbon emissions and promoting the use of electric vehicles in the area.
Tata Power has also promised to install rooftop solar power systems under the PM Surya Ghar Yojana for 10 lakh families. With the help of these installations, distributed renewable energy generation will be encouraged, and affordable, clean power will be delivered directly to houses throughout the state.
The MoU has the potential to establish Rajasthan as one of India’s foremost renewable energy hubs, helping the state meet its ambitious goals of reaching net-zero emissions by 2070 and 500 GW of renewable capacity installed by 2030.
Directly Supporting More Than 28,000 Individuals
Over 28,000 direct jobs are anticipated to be created in Rajasthan as a result of the MoU, significantly boosting the region’s economy. Rajasthan will become a more desirable location for green investments as a result of this significant investment. This development will also support several businesses, such as solar manufacturing, infrastructure development, and innovative renewable energy sources.
This partnership is anticipated to have a far-reaching socio-economic influence above and beyond the energy sector. Tata Power hopes to promote sustainable industrial development in Rajasthan by bringing down energy costs for enterprises and consumers alike through large-scale integration of renewables.
Rishabh Pant, an Indian cricketer, has made an investment in TechJockey.com, which is a rapidly expanding online marketplace for software solutions.
In exchange for INR 7.40 crore, Pant purchased a 2% ownership in the company, which resulted in the company being valued at INR 370 crore (about USD 44.17 million).
TechJockey’s founders, Akash Nangia, a former vice president at Zomato, and Arjun Mittal, a former executive at McKinsey, established the company in 2017 with the purpose of connecting software sellers with small enterprises all throughout India. Beginning of 2024, the company expanded its activities into the United States, as part of its global expansion plan.
Pant’s Vision Behind the Expansion
When Pant made the decision to invest in TechJockey, his previous expertise in professional sports had a significant role. Having the appropriate technology for live streaming, commentary, and DRS is absolutely necessary in the sport of cricket. When you have the appropriate tools, it is easier to make intelligent decisions. Pant added that because he had witnessed the efficient growth that software can bring to organisations, it made perfect sense for him to invest in TechJockey.
Pant’s participation was enthusiastically welcomed by the leadership of the company, with Nangia emphasising the value of having a cricketer of Pant’s calibre on board. Nangia stated that it is not simply about Pant’s popularity, he has a profound understanding of business.
Company’s Current Revenue and Expansion Plans
With the new capital, TechJockey intends to increase the number of global merchants on its platform, as well as scale up its marketing activities and grow its footprint in the United States. According to Nangia, who has noticed the development and potential of SaaS companies, the TechJockey is well-positioned for expansion thanks to its SaaS-based approach.
A revenue of INR 125 crore was reported by TechJockey for the fiscal year 2024, with ad sales contributing between INR 7 and 10 crore. During the fiscal year 25 (FY25), the firm intends to achieve a revenue of INR 170-180 crore, which would be driven by Pant’s investment and the global expansion strategy.
Cricketers Putting Their Money Into Startup Sector
Rishabh Pant is the latest addition to the rising number of Indian sports personalities who have invested in startup sector. KL Rahul, an Indian cricketer, made an investment in the D2C men’s lifestyle firm Metaman just a month ago. In July, South African cricketer AB De Villiers supported the Indian supplement brand Supply6. A cricket player named Shreyas Iyer made an investment in the health technology platform known as Curelo earlier this year.
In the year 2023, a number of other notable players, including Sachin Tendulkar, Virender Sehwag, Sourav Ganguly, and Hardik Pandya, made financial contributions to a number of other Indian companies. This exemplifies a larger trend in which athletes are increasingly moving to business ownership and investments.
Bengaluru will be home to one of Carl Zeiss’s largest lens manufacturers, as the German medical technology and optics business prepares to invest $10 billion in the city.
With an investment of INR 2,500 crore, the new plant will produce five times as much as the company’s current facility, which is also located in Bangalore but in a separate part of the city. Miguel G. Diaz, MD of the India business, told the media that the company is not only doing this, but it is also increasing its research and development efforts in India. This is because the company leverages India to work on solutions that are implemented globally.
Investing in India is a smart move because the country is a great place to do business. Further, the economy is expanding rapidly.
Strengthening the Manpower by Hiring Around 800 New Employees
In preparation for the opening of its new facility at the end of 2024, Carl Zeiss India intends to recruit an extra 800 workers. Carl Zeiss first set up shop in India in 2012, after breaking into the country’s market in 1998. The planned facility is going to integrate three existing facilities in Bengaluru, while the corporation currently operates four units in India. Europe, Asia, the MENA, and the Middle East are some of the locations that receive more than 60% of the company’s manufactured goods.
Revenue Carl Zeiss Generating From Its Indian Units
The company’s total sales in India was INR 1,500 crore last year, and it employs 1,400 people across all of its activities. The company claims that all of its businesses are experiencing include, making it a market for everything.
The German manufacturer has five divisions in India. One of them is medical technology, which brings in INR 800-900 crore annually. The other two divisions are industrial quality solution (IQS), which makes metrological and dual-use equipment, research microscopy (RMS), vision care (VIS), and consumer products (COP), which include cinema and photography lenses, binoculars, and sports optics.
About Carl Zeiss
Carl Zeiss, an optician, started the company in 1846. Since then, it has evolved into a world leader in producing optical instruments and lenses with the highest levels of perfection. Medical technologies, semiconductor manufacturing, photography, and many more fields make use of Zeiss’s cutting-edge products. Zeiss claims that it has a long history of innovation in optics, and the company is just as well-known for its contributions to image technology, where it has established benchmarks for accuracy and reliability. The corporation will always be at the forefront of technical innovation because of its dedication to R&D.
One of the most promising places to set up shop and build a successful trading model is India. This is why a lot of big multinational businesses are pouring money into the country in anticipation of their future growth. Wright, a market research company, has reported that the Indian financial markets are quite active and optimistic. This expansion is changing the face of the Indian market and fueling the dreams of millions of people, not merely numbers on a graph. Significant governmental reforms, rising local demand, and large foreign investments are key factors shaping this dynamic economic landscape. A lot will change for India’s economy in the 2024 elections. Preliminary surveys and market reactions point to a stable government, which could have far-reaching consequences for both the near-term stability of the market and the direction of economic policy in the long run. These elections are a barometer for investor confidence and economic policies for the future, in addition to testing the waters of political strength.
India is all set to witness some of the interesting trends lately and these developments are all poised to take the market to a new level.
Elaborating further on that note, Ivy Chin, Partner, Inflection Point Ventures stated, “In 2024, I anticipate a rise in the number of agreements of a higher magnitude. With all the preparation that has gone into the past few years, this would be growth capital for start-ups that are entering their later stages of development, as well as investments in some of the most intriguing new areas, such as space and artificial intelligence. Not only have these two areas been changing, but investors’ knowledge of them has also grown. With the proliferation of both startups and the ecosystem supporting them, angel investing is only going to increase. In my opinion, more interest and money will be directed towards improving our knowledge of sustainability and clean tech health and our capacity to drive their monetization. Finally, as the world becomes more interconnected, investors will seek businesses both domestically and abroad.”
Echoing similar sentiments, Deep Bajaj, Co-Founder, of Sirona Hygiene and an Angel Investor stated, “Particularly in sectors experiencing disruptive innovations and fast technical advancements, we anticipate that investment levels will continue to rise. There will likely be a rise in interest in later-stage investment rounds as companies expand and seek new opportunities. Renewable energy, health tech, and artificial intelligence are three sectors that are anticipated to attract a lot of investment due to their enormous return and impact potential.”
Following the 2024 elections, investors anticipate further policy improvements and the possibility of economic stability. Shareholders should have more faith in the market and better stock performance in such a reformative and stable environment. Market downturns should be seen as chances for investors to strengthen and diversify their holdings, especially in industries expected to experience growth as a result of policy initiatives or international economic trends. The hope for a stable administration is boosting spirits since, in theory, it should make economic and corporate decisions and policy execution easier by creating a more predictable environment.
Many investors are being enticed by the ideas of digitization, renewable energy, sustainability, etc., and have already begun investing in this domain because the current administration is actively encouraging it. Considering that the majority of surveys predict that the present alliance will serve a third term, it appears that this investment trend will continue.
“Investing in rapidly growing digital companies is a smart move since technology is always changing, which encourages innovation and undermines existing industries. In addition, there are attractive investment opportunities in solar, wind, and other clean energy companies due to the worldwide emphasis on sustainability, which is driving the renewable energy sector ahead,” stated Chin.
“Innovations in biotechnology and healthcare startups that improve both accessibility and the quality of healthcare delivery are attracting more and more investors. In 2024, I intend to stay away from eCommerce companies that fail to differentiate themselves in terms of technology or marketing strategies, as well as SaaS companies whose capacity to scale and generate revenue is not clearly defined,” he added further.
Bajaj seconded the views of Chin and said that when it comes to waste management, renewable energy, and eco-friendly alternatives, they think modern innovation holds a lot of potential for tackling sustainability concerns. Traditional manufacturing and other legacy sectors may not be suitable for their investment strategy in 2024 due to their inflexible regulatory environments or low levels of scalability.
Preferred Sector for Investment in India as of February 2023
Elections and Stock
The 2024 elections are going to be a watershed moment, and early predictions are pointing to a win for the current administration, which is seen as reform-minded and sympathetic to the market. Markets are influenced by expectations, which can cause them to invest more in sectors that government policies are projected to help. For example, following the re-election of a reform-minded administration, which had significant market gains in the months that followed, the market reacted positively to the election of governments seen as being open to reform. The markets might keep going higher in 2024 if the results hold true and a government focused on reform is created or re-elected. This would be because investors are hoping for stable and supportive economic policies.
Stretching further on the current election fever, Chin opined, “Global conflicts have the potential to negatively affect the supply chain and the price of resources because the globe is always changing. In light of the foregoing, the Indian startup system would benefit from the outcomes of elections that indicate stability, emphasize a longer-term plan, and invest in and drive clear policies. Greater government support and investor confidence might increase funding opportunities and access to capital for entrepreneurs if election optimism holds. This, in turn, might stimulate innovation and economic growth.”
Differing from the above views, Bajaj said, “While fundamental market dynamics and long-term strategic factors often inform our funding decisions, political events like elections can introduce short-term volatility and changes to the investing environment. We remain vigilant in our risk management efforts by closely monitoring geopolitical events and adjusting our investment approach as needed. Our end goal is to identify innovative and robust companies that can thrive in the face of challenges and create lasting, valuable products and services.”
Traders are bracing for a dramatic increase in the Indian market when the current government gets re-elected, according to recent market trends. Investors are betting big on this development because they think the present administration will keep supporting them the way it has in the past. The areas of digital innovation, sustainable practices, and renewable energy are expected to attract substantial investment due to the high expectations of investors in these areas. There has been a marked improvement in the investment climate in India.
FAQs
What are the anticipated trends in investment for India in 2024?
Investors expect increased investment in sectors such as space, artificial intelligence, renewable energy, health tech, and digitization.
How are investors perceiving the impact of the 2024 elections on the Indian market?
Investors anticipate policy improvements and economic stability post-election, leading to better stock performance and increased investment opportunities.
What are some key factors fueling the optimism in the Indian financial markets?
Significant governmental reforms, rising local demand, and large foreign investments are fueling the optimism in the Indian financial market.
Startup companies need a certain amount of investment for growth. Wealthy investors like to invest their capital in businesses with long-term growth in view. This capital is known as venture capital and the investors are called venture capitalists. The venture capital investment is made when a venture capitalist buys shares of companies and becomes a financial partner of their business.
The data recorded at the end of Q3 2019 states that the top 10 most active Venture Capital firms in India alone contribute to 32% of the total deal count in the startup ecosystem. The Venture Capital investment is often termed as risk capital or patient capital. This is because most VC investing capitals or rather a majority of them harbor tremendous risks of parting from the money invested if the venture doesn’t succeed. Besides, the capital coming from venture capital firms or VC funds usually needs a medium to long-term period for the investments to fructify.
The Indian startups secured over $12.1 billion from the venture capital funds in the first 6 months of 2021, which is $1 billion more than the overall funding that they received last year. Venture Capital (VC) investment in India more than doubled from its previous quarterly high of $6.7 billion in Q2 2021 to $14.4 billion during Q3 2021, according to a recent report by KPMG.
In the year 2021, the Indian startups have successfully managed to mop up $36 bn worth of funds and most of them came from the VC funding for startups and private equity investments, which increased by 3X from the earlier year. These funds are not only helping the startups find it easier to raise funds but are also adding gear to the Indian startup ecosystem, thereby making it a prominent and growing entity in the global landscape.
Citing information from Venture Intelligence, the total investments in the first half of 2023 stood at $3.8 billion, which is divergent from the substantial figure of $18.4 billion seen previously.
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Sequoia India & Southeast Asia has undergone a rebranding process and emerged as Peak XV Partners. Sequoia Capital the parent organization of Peak XV Partners is an American venture capital firm, headquartered in Menlo Park, California. Sequoia invests in both public and private companies. Sequoia Capital has invested in over 1000 companies since 1972, the list of which includes big names like Apple, Google, Oracle, Nvidia, Github, and more. It is mainly focused on the technology industry. Peak XV Partners has invested in companies such as JustDial, Knowlarity, Practo, iYogi, and bankbazaar.com. It has assets worth $5.4 billion under management in India and it is spread across seven funds.
Every six months, Sequoia shortlists 15 to 20 startups for each cohort and provides a capital investment of $1 Million to $2 Million with participation from other investors.
Accel, formerly known as Accel Partners, is an American venture capital firm based out of Palo Alto, California, US. The company has its offices in Palo Alto and San Francisco along with operating funds in India, China, and London. Some of the major companies that Accel has funded over the years are Facebook, Flipkart, Atlassian, Slack, Spotify, Etsy, and more.
Accel currently has assets of more than $1.6 billion under management. It has closed nearly six funds in India. The company’s portfolio of funding Indian businesses includes names like Flipkart, Swiggy, Blackbuck, Cure.fit, and more. The firm’s growth capital investments focus on more developed companies that require a larger amount of capital to expand their business.
Accel secured a substantial sum of $650 million in 2022 for its seventh fund, known as Accel India VII. This fund supported early-stage startups in both India and Southeast Asia.
During the first quarter of 2023, the VC firm actively engaged in 12 investment deals with promising startups. Among the recipients of their investments were Zypp Electric, Kratos Studios, Rigi, and Brick&Bolt. Notably, Accel took part in a total of 48 investment deals over the course of 2022.
Accel is a venture capital firm that concentrates on the following technology sectors: Consumer, Infrastructure, Media, Mobile, SaaS, Security, Customer care services, Enterprise software, and E-commerce.
Blume Ventures is an early-stage and seed-stage venture fund that has its headquarters in Mumbai, Maharashtra, India. The company was founded in 2010 as a venture capitalist firm that aims to improve startup financing in India. Blume Ventures primarily focuses on tech companies. The company launched its first micro-VC fund in 2011, becoming the first institutionalized early-stage investor at that time.
Blume Ventures raised a $41 Million opportunity fund in 2020, which was one of the largest domestic opportunity funds among the Indian venture capital funds designed to invest in best-performing portfolio companies. From this fund, Blume has invested in Series B to D rounds in firms like Unacademy and Servify. The company had nearly three other funds the last one was $102 Million before the COVID-19 pandemic in India. The VC firm has nearly $225 Million in total capital under management. Blume Ventures boasts of managing capital amounting to more than $280 million and has backed 150+ startups.
During the year 2022, the venture capital fund successfully concluded a funding round, securing a total of $250 million for its operations. This enabled them to support 31 Indian startups, notable among them being Lambdatest, Pixxel, and Jai Kishan, an agritech startup.
During the first quarter of 2023, Blume Ventures engaged in funding rounds for 20 startups, providing investments to notable companies including ApnaKlub, Virohan, ElectricPe, and Aerem.
Capital Float, Firstcry, Swiggy, IndustryBuying, Aye Finance, Rivigo, Cleartax
Key Sectors
Fintech
Stage
Stage Agnostic, Private Equity
Website
Elevationcapital.com
Venture Capitalist Firm – Elevation Capital
SAIF Partners rebranded as Elevation Capital on October 20, 2020, is a stage and sector-agnostic private equity firm in Asia. The firm is headquartered in Gurugram, Haryana, India, and aims to make minor investments in seed-stage, early-stage, and later-stage companies. Elevation Capital (formerly known as SAIF Partners) was started as Softbank Asia Infrastructure Fund (SAIF) in 2001 with a $400 Million fund where Cisco Systems and Softbank Group were the sole limited partner.
When Elevation Capital started as SAIF Partners, it was headquartered in Hong Kong and was focused on China, India, Hong Kong, and Taiwan. In India, the venture capital firm has offices in Bengaluru and Gurugram. Elevation Capital had already invested in the early stages of companies like FirstCry, Just Dial, MakeMyTrip, Meesho, Paytm, ShareChat, Swiggy, and more. The firm has doubled its investment in Indian firms in 2020 into new segments like edtech, health tech enterprise software-as-a-service (SaaS), entertainment, and direct-to-consumer startups.
Tiger Global Management LLC operates as an investment firm that is focused on public and private companies in the global Internet, software, consumer, and financial technology industries. The mission is to generate world-class investment returns over the long term. It builds a unique, global investment platform. They invest in high-quality companies that benefit from powerful secular growth trends and are led by excellent management teams.
Tiger Global Management was founded in 2001 and is headquartered in New York, US, and is one of the most global investors in Indian startups that has started investments of around $300 Million. It has backed more than 13 companies, including a $90 Million round in agri-tech startup Ninjacart and a $60 Million infusion in B2B industrial goods marketplace Moglix in the first half of FY19.
The company is said to have invested in more than 442 companies across the globe with 7 designated funds. It has also witnessed 64 exits since its inception in 2001. In India, this VC firm has invested in more than 97 startups. Tiger Global is reported to have raised the highest amount of capital amongst venture capital firms between 2007 and 2017. In 2020, Tiger Global helped its investors earn around $10.4 billion, which is more than any other hedge fund on the annual list of London fund-of-funds firm LCH Investments’ top 20 managers.
Razorpay had been among the companies, which includes Urban Company, Flipkart, Moglix, and more that Tiger Global Management had invested. In the first half of 2019, Tiger Global Management made its founder, Coleman, the top-earning US hedge fund manager in 2020 where the company had mopped in around $3 billion in fees and gains on investments.
In mid-2022, Fund 15 concluded its fundraising with an impressive total of $12.7 billion, showcasing a significant growth of 2 times compared to the 16th equity fund announced in October.
In June 2023, Tiger Global successfully secured $2.7 billion for its new fund, though it fell below its initial target of $6 billion.
Kalaari Capital, founded in 2006 in Bengaluru by Vani Kola. It focuses on technology-related companies in India. Till now it has made more than 92 investments across 3 funds and witnessed more than 15 exits from companies like Myntra and Snapdeal. It has also made a partial exit from Zivame.
Kalaari Capital manages $650 Million in assets under management. It boasts of a strong advisory team in Bangalore investing in the early stage. Kalaari is passionate about investing in entrepreneurs who are poised to be tomorrow’s global leaders. This firm had funded $290 Million in 2015, which was the largest fund by an Indian VC at that time.
Matrix Partners is a US-based private equity investment firm focused on venture capital investments. The firm invests in seed and early-stage companies in the United States and India. It mainly concentrates on the software, communications, semiconductors, data storage, Internet, or wireless sectors. Matrix has invested in Apple Computer, Alteon WebSystems, and Office Club. It is said to have nearly $1 Bn as assets under management (AUM). The company has invested in more than 549 companies throughout the world with its second fund. Online gaming platform Zupee raised $10 Million in a funding round led by US-based growth equity firm WestCap Group and existing investor Matrix Partners India.
The firm has also noted 120 successful exits from companies like HubSpot and Oculus. The firm entered India back in 2006 under the leadership of general partners Avnish Bajaj and Rishi Navani.
Nexus Venture Partners was founded in 2006. Silicon Valley and Mumbai-based venture capital firm, Nexus Venture Partners is the first India-US venture fund. The company has grown to be a popular venture capitalist firm that has helped a list of companies to raise funds like WhiteHat Jr., Rapido, Delhivery, Zomato, and more.
The firm makes investments in early-growth stage companies with an average ticket size of $500K-$10 Million. The firm had raised $100 Million in its first fund. It is said to have more than $1.4 Billion in assets under management as of FY 19. The firm has invested in over 100 startups such as Zomato, Snapdeal, Delhivery, Goodera, etc. Its successful exits include Gluster, Gitter, ElasticBox, and MapMyIndia among others.
By March 2023, Nexus Venture Partners had successfully raised a total of $2.6 billion in funding in a span of seven funds.
WebEngage, Wow! Momo, Druva, Box8, Faballey, Little Black Book
Key Sectors
E-commerce & Agriculture
Stage
Early Stage, Seed
Website
Iangroup.vc
Venture Capitalist Firm – Indian Angel Network
Founded in 2006, in New Delhi, India, Indian Angel Network (IAN) is a group of primarily Indian angel investors funding early-stage startups. The group had 450 members from 11 countries in 2017. Indian Angel Network, India’s first and Asia’s largest angel network brings together successful entrepreneurs and CEOs. The group has invested in companies, such as PregBuddy and SuperProfs. In 2018, one of its founders Padmaja Ruparel was ranked amongst Fortune (magazine)‘s list of The Most Powerful Women in India.
On Nov 8th, 2020, the Indian Angel Network (IAN) announced the joint with Bangladesh Angels Network (BAN). The aim is to work together to source, cross-refer, and promote linkages in technology-enabled startups in India and Bangladesh to create an enabling environment for venture investing in both ecosystems. IAN is a SEBI-registered early-stage fund with more than 470 investors from around 11 countries. It aims at investing up to $1 Million, with an average ticket size of about $400K-$600K.
By October 2022, Indian Angel Network had successfully raised a total of ₹20.5B billion in funding in a span of four funds.
Omidyar Network India was founded in 2004. Omidyar Network India is an investment firm focused on social impact. The company looks to invest in startups that are helping to build more inclusive and equitable societies for the benefit of many. It provides grants to nonprofits in the areas of digital identity, education, emerging technologies, financial services, and more. The company started ReSolve Initiative, which is designed to invest in building solutions for two long-standing themes – MSMEs and migrant workers. The initiative will look to entrepreneurs, thought leaders, and policymakers to come together to reframe and resolve the issues plaguing these areas.
It has invested over $300 Million into the Indian startup ecosystem. The company has also decided to invest an additional $350 Million (INR 2486 Cr) in the upcoming five years. By this investment, the social impact investment firm also wants to target 500 Million individuals, who have just started using smartphones.
Features of Venture Capital Investments
High-risk investment
High Tech projects
Participation in Management
Length of Investment
Illiquid Investment
How the Venture Capital Industry Works
Methods of Venture Capital Financing
Equity financing – Equity financing is the raising of funds by selling the shares of the company. Sometimes companies need money for short-term or long-term investments and the sale of shares proves beneficial in the way that they simply sell their shares or the ownership of the company in return for cash
Participating debentures – This is the form of raising capital from venture capitalists and other companies in different phases with varying interest rates. Here, the initial seed round comes without any interest, however, the successive rounds, as the startup grows, are chargeable at increasing interest rates.
Conditional loan – Conditional loans are another way of raising funds that do not carry interest. These loans can be availed by startups and other companies to meet their funding needs but they need to be repaid to the lender in the form of royalty once the company starts making revenue. The rate of royalty varies from (2-15)% based on several factors like the gestational period, external risk, and more.
Income note – Income notes can be categorized under hybrid financing that is similar to traditional and conditional loans in characteristics when combined. In this form of a fund raised the company for which they have to have both royalty and interest but at comparatively lower rates.
Convertible loans – Going by the term, “conditional” loans are the loans that are provided to startups and other business ventures on the condition that if the loan amount is not paid within a stipulated time they can then convert the same into equity.
The venture capitalist provides the funding knowing that there’s a significant risk associated with the company’s future profits and cash flow. Capital is invested in exchange for an equity stake in the business rather than given as a loan.
A venture capital investment company is an investment firm that invests in startups and mentors them for their growth. Venture capital firms are generally made up of well-off investors, investment banks, and other financial institutions.
How many Venture Capital firms are there in India?
There are over 800+ venture capital firms in India, as of 2022.
What are the top Venture Capital firms in India?
Some of the top Venture Capital firms in India are:
Peak XV Partners
Accel
Blume Ventures
SAIF Partners
Tiger Global Management
Kalaari Capital
Matrix Partners
Nexus Venture Partners
India Angel Network
Omidyar Network India
What are Corporate Venture Capital funds?
Corporate Venture Capital funds can be defined as the corporate funds that the Corporate Venture Capital firms invest directly in the external startup companies.
To list some of the top corporate venture capital firms:
Brand Capital
Amazon and Amazon Alexa Fund
Google and Google Ventures
Unilever Ventures
Samsung Ventures
Intel Capital
Microsoft
Bain Capital Ventures
Reliance Capital
Mahindra Partners
Experian Ventures
Lodha Ventures
How to raise venture capital for a tech startup?
If you are looking to raise venture capital for a tech startup that is on your mind, then here are some decent ideas that you can go for to raise some venture capital:
Set out with a powerful business idea
Make a unique and foolproof business and revenue model
Make a list of the criteria for getting funds from a specific list of venture capitals
Know your venture capital firms
Prepare your pitch
Reach out to prominent venture capital firms politely and confidently
Speak well and support your statements with research data
Communicate your ideas clearly
Establish your value propositions well
Wait for the results
What are early stage VC firms?
The early stage VC firms are the venture capital firms that are typically known to support startup businesses in their earlier stages of growth. These stages also include the beginning phase when the projects are still in the market research and development stage.
Investing in a software-as-a-service (SaaS) startup can be a lucrative opportunity for those looking to diversify their portfolio and support innovative companies. SaaS businesses provide subscription-based access to software over the internet, rather than traditional one-time purchases or licensing. This business model allows for recurring revenue streams and the potential for long-term growth. However, it’s important to thoroughly research and evaluate the potential risks and rewards before making any investment decisions.
Investing in a SaaS startup can be risky, but it can also be very rewarding. By choosing a strong, well-established company, you can set yourself up for long-term success and potentially earn a significant return on your investment.
In this article, we will explore some key considerations for investing in a SaaS startup, including the market landscape, financial performance, and management team. This article is exactly about that. We will go top to bottom about everything that one needs to know before investing in a SaaS startup.
A SaaS (Software as a Service) startup is a company that offers a software application on a subscription basis. Instead of purchasing the software outright and installing it on their own computers or servers, customers pay a recurring fee to access the software over the internet. This business model allows customers to use the software on a pay-as-you-go basis, without having to make a large upfront investment in hardware or IT infrastructure. SaaS companies typically host the software on their own servers and provide access to it through a web browser or other means. Some examples of SaaS startups include cloud-based productivity tools, customer relationship management platforms, and e-commerce platforms.
Things to Know Before Investing in SaaS
If you are considering investing in a SaaS (Software as a Service) startup, it’s important to understand some key aspects of the business model and the industry. Here are some things to consider
Business model: SaaS companies typically sell subscriptions to their software, rather than selling it as a one-time purchase. This means that the company’s revenue is generated from ongoing customer payments, rather than from upfront sales.
Target market: It’s important to understand who the company’s target market is and whether there is a large enough demand for the product.
Competition: It’s also important to understand the competitive landscape and how the company’s product compares to its competitors.
Growth Potential: Look for signs that the company is growing quickly and sustainably, such as a growing customer base and increasing revenue.
Team: Consider the quality and experience of the company’s management team and its ability to execute its plans.
Financials: Review the company’s financial statements to get a sense of its financial health and future potential.
Risk: As with any investment, it’s important to consider the potential risks involved. These may include technological risks, competitive risks, and regulatory risks, among others.
It’s also a good idea to seek the advice of a financial advisor or professional before making any investment decisions.
How SaaS Is Different From Other Startups
Even though these sorts of startups are also startups and they too become unicorns, there are some inherited differences between these. There are several factors that make SaaS startups different from regular startups
Business Model
SaaS startups typically operate on a subscription-based business model, where customers pay a recurring fee to access the product or service. This is different from traditional startups, which may sell products or services on a one-time basis.
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Customer Acquisition
SaaS startups often rely on digital marketing and sales tactics to acquire customers, while traditional startups may rely more on traditional marketing and sales methods.
Customer Retention
SaaS startups typically have a higher customer retention rate due to the recurring nature of their subscription model. Traditional startups may have more fluctuation in customer retention due to one-time purchases.
Revenue streams
SaaS startups often have steadier revenue streams due to their recurring subscription model, while traditional startups may have more unpredictable revenue streams.
Scalability
SaaS startups are often more scalable than traditional startups due to their ability to easily add new customers through their subscription model.
Overall, SaaS startups differ from traditional startups in their business model, customer acquisition and retention tactics, revenue streams, and scalability.
The Business Model of a SaaS Startup
A business model is a way a company generates revenue and profits by selling products or services to its customers. It outlines the different elements of the company’s operations, including its target market, marketing and sales strategies, and financial projections. Business models can vary widely depending on the type of industry and the specific needs of the company. Some common business models include subscription-based models, pay-per-use models, and freemium models. There are several factors that you can consider when evaluating the business model of a SaaS (Software as a Service) startup
Revenue Streams
A SaaS startup typically generates revenue through subscription-based pricing models, where customers pay a recurring fee to access the software. Look for a startup with multiple revenue streams, such as upsells and cross-sells, as this can increase the overall stability of the business.
Customer acquisition costs
It is important to consider the costs associated with acquiring new customers, as these costs can impact the profitability of the business. Look for a startup with a high lifetime value (LTV) to customer acquisition cost (CAC) ratio, as this indicates that the company is generating a high return on investment for each customer it acquires.
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Churn rate
The churn rate is the percentage of customers who cancel their subscriptions over a given period of time. A high churn rate can be a red flag, as it indicates that the startup is having difficulty retaining customers.
Scalability
Look for a SaaS startup with a scalable business model, meaning that the company can easily expand its customer base and increase revenue without incurring significant additional costs.
Market demand
Consider the size and growth potential of the market in which the startup operates. A startup with a product or service that meets strong demand in a growing market is more likely to be successful.
Competitors
It is also important to consider the competitive landscape in which the startup operates. A startup with a unique value proposition and a competitive advantage over its competitors is more likely to succeed.
Growth and Potential
The growth and potential of a SaaS startup are determined by a variety of factors, including market demand, competitive advantage, customer acquisition and retention, financial stability, and scalability. Companies that are able to effectively address these factors are more likely to experience growth and success. For example, a SaaS startup with a unique product that addresses a specific need in the market and has a strong customer acquisition and retention strategy is more likely to experience growth than a company with a generic product and poor customer service. Similarly, a SaaS startup with a strong financial foundation and the ability to scale its operations is more likely to experience growth than a company with weak financials and limited scalability. Overall, the growth potential of a SaaS startup is largely dependent on its ability to effectively address the key factors that drive growth in the industry.
There are several factors that can be considered when evaluating the growth potential of a SaaS Startup
Market Size
A large and growing market can provide a strong foundation for the company’s growth. Look for a market that is large enough to sustain the company’s growth over the long term.
Product-market Fit
Does the company’s product or service solve a real problem for its target market? A product that meets a strong customer need is more likely to experience growth.
Competitors
Analyse the competitive landscape to understand the company’s position in the market. A company with a unique value proposition and minimal competition is more likely to experience growth.
Pricing
Consider the company’s pricing strategy and whether it is sustainable over the long term. A company that charges a higher price for its product or service may have more room for growth than one that charges a lower price.
Customer Acquisition Cost
Look at how much it costs the company to acquire new customers. A company with a low customer acquisition cost is more likely to be able to scale its business.
Customer Retention
High customer retention rates can be a sign of a strong product or service. A company with a high retention rate is more likely to experience growth.
Revenue Growth
Look at the company’s past revenue growth to get a sense of its potential for future growth. A company with a history of strong revenue growth is more likely to continue growing in the future.
Overall, it is important to consider a variety of factors when evaluating the growth potential of a SaaS startup.
Best Practices Before Investing
While the best practices that you can follow before choosing a SaaS startup to invest in can be a lot easier than it looks. As a rule of thumb, you can look for these check pointers in any Startup that uses software as a service.
Financial Stability: Look for a company with a strong financial track record, including steady revenue growth and profitability.
Customer Base: Look for a company with a diverse and growing customer base, as this can indicate a strong demand for the company’s products or services.
Product Differentiation: Consider whether the company’s products or services stand out from the competition, as this can be a key factor in attracting and retaining customers.
Management Team: Look for a company with a strong and experienced management team that is capable of executing the company’s business plan and driving growth.
Scalability: Consider whether the company’s products or services can be easily scaled to meet the needs of a growing customer base.
Market Opportunity: Consider whether the company operates in a growing market, as this can provide a strong foundation for long-term growth.
Intellectual Property: Look for a company that has strong intellectual property protections, such as patents or trademarks, to help protect its products or services from competitors.
Exit Strategy: Consider whether the company has a clear exit strategy, such as an IPO or acquisition, as this can help you maximize your investment returns.
Conclusion
Investing in a SaaS startup can be a lucrative opportunity, but it also carries its own set of risks. It is important to thoroughly research the company and its business model before committing any funds. Look for a company with a clear mission and vision, a solid customer base, and a track record of success. Additionally, be sure to consider the financial stability of the company and its ability to generate steady revenue streams.
Just remember to do your due diligence and weigh the pros and cons before committing any funds. With the right approach, investing in a SaaS startup can be a smart move that pays off in the long run.
FAQ
How do I fund a SaaS startup?
The four types of SaaS funding are as follows
Venture capital
Angel investment
Incubators/Accelerator
Revenue-based financing & MRR Lines
Why SaaS is a good investment?
SaaS software lives online and there is no physical product to manage, ship, store, and manufacture. That significantly reduces the time, cost, and manpower required. That allows SaaS businesses to launch with less capital and increases their profit margins.
Why is SaaS so profitable?
SaaS companies tend to have low churn and high renewal rates, resulting in high customer lifetime values with a good sales team selling a product that works should be able to generate customer retention rates above 90% and revenue retention at or above 100%.
What percentage of SaaS startups succeed?
Over 90% of SaaS startups fail, only 35% get past the 10-year mark, and only 40% of these ever become profitable. To avoid product failure a good product positioning helps achieve customer fit and reduces customer dissatisfaction.
Everyone seeks to earn a hefty sum of money as well as maximize the long-term growth of capital. All they require is to calculate the expected return to benefit their money value and bankroll.
On the other hand, the calculation of long-term wealth should minimize uncertainty. Therefore, Kelly L.J has developed a theoretical statistical method to measure expected return value in the future, by adjusting the investment size with the use of the Kelly criterion.
People flummox themselves with the Kelly criterion and return on Investment formula. So the difference between these two is simple: interest is considered while calculating ROI. And the Kelly criterion follows the probability.
Generally, the Kelly criterion is a formula that maximizes the expected value of the logarithm of wealth that is equivalent to maximizing the expected long-term growth rate. The idea was derived from an American scientist John L. Kelly, who was a member of a research center at AT&T’s Bells Lab, New Jersey in 1956.
This method is used mostly by gamblers and investors to get double on the investment or bet they have funded. The formula works through a predetermined fraction of assets.
The Kelly criterion method earned recognition in gambling and investment, as people aim to get more returns and save bankroll. So, the Kelly criterion fit the ball in accelerating the earnings.
What are the Pros and Cons of Kelly Criterion?
Pros of Kelly Criterion:
The main purpose of implementing the Kelly criterion is to estimate the expected value in the future which helps maximize the rate of asset growth.
There is no plethora of loss of money on the investment, as it will take less money in case of prolonged series of failures.
Lately, the Kelly criterion is highly dependent on the probability of winning and the probability of loss of the asset value. So, if you have the chance of high returns on the investment, it’s a win-win situation for you accordingly.
Cons of Kelly Criterion:
As said before, The Kelly criterion works with probability whereas if the rate of investment runs positive in the market, you would benefit from its output. Meanwhile, if the asset value faces a bank stake, then it’s a loss for you.
Secondly, people won’t stay in the long-term investment unless it shows propitious promising in the future for the investors.
The Kelly criterion is formulated in two fields- Gambling and investment, which is the only place, where a person can win a hefty amount and manage a long-term growth of capital.
The method is all about the comparison of other strategies to identify the asset value. In the olden days, the Kelly criterion was made for gambling, where the participant bets on the coin and expects a high value.
Besides, the Kelly criterion works on investment by enticing participants to pay off more on such investment which gives him flavorful output in the future.
Participants use the Kelly criterion, where the expectation value of a function is given by the sum, over all the possible outcomes, of the probability of each particular outcome multiplied by the value of the function in the event of that particular outcome.
How do investors use the Kelly criterion?
Kelly Criterion Formula
Kelly criterion is used by investors while trading in the stock market to find the percentage of the money they need to allocate to each investment. This is done by using a mathematical formula.
K% = W – [(1-W) / R]
where,
K%=The Kelly percentage
W=Winning probability
R=Win/loss ratio
The investors have to access their past 50 to 60 trades from their recent tax returns. Investors have to calculate the value of W – the winning probability. The value can be found by diving into the number of positive resultant returns by the total number of trades that can be both positive and negative. Anything above 0.50 and any number close to 1 is good.
Then R – win/loss ratio is calculated by dividing the average gain on positive trades by the average loss on negative trades. It is good if the number is less than one and the losing trades are small.
Both the W and R values are applied to the Kelly criterion formula and the result is noted. The result percentage indicates the size of the positions that should be taken in the assets in the portfolio. If the resultant percentage is found to be 0.31. Then one should take an estimated 31% position in each of the equities in the portfolio.
It is advised that not more than 20% or 25% be invested in one asset or equity as it increases the financial risk.
The Kelly criterion is known to be used by popular investors like Warren Buffet, Charlie Munger, and Bill Gross.
Kelly Criterion is a money management principle and can be applied mainly in activities related to gambling and investment. In investment, the formula calculates the percentage of the account that the investor needs to invest. In sports gambling, the formula is mainly applied to maximize the potential returns on wagers and minimize the chances of losing a bankroll entirely.
Let’s take an example on the note of “how do the Kelly criterion formulae apply?” Let’s say probability, the first thing that comes to mind is fifty-fifty chances or a win-loss situation. If you roll a dice, then the chances of getting any number between 1,2,3,4,5, and 6 are unknown. So, take 1,2,3 as 60% possibility whereas 4,5,6 are 40% possibility and vice versa.
For instance; if a company offering a trade of 27.73 per share with an upside range of 37.65 and downside worth of 23.85.
So, out of 100% per share value (27.73)- 70% probability of earning an upside value of 37.65 and 30% of 23.85.
if you calculate the percentage value of upside and downside per share, you will get a 35.77% Gain and 13.99 as a Loss.
So, now perform the Total Expected Outcome (Probability)= (70% x 35.77) + (30% x [-13.99 LOSS]) = 20.84
now, apply Kelly Criterion formulae;
Total capital planning to allot = 20.84/ 35.77= 58.26%
Therefore, the company plans to invest 58.26% of the capital investment.
Conclusion
Kelly Criterion is one famous method used for a long time both in gambling and investments. Kelly criterion helps in minimizing the loss and focuses on achieving efficient returns through diversification. It is necessary and important that proper judgment based on reliable means should be taken while dealing with capital.
Even though the formula was created by John Kelly of Bell Labs, to analyze long-distance telephone signal noise, the Kelly criterion acts as a reliable model to help gamblers and investors in deciding the size of the position they should take which leads to diversification and efficient and effective money management.
FAQs
What is Kelly Criterion?
Kelly Criterion is a formula proposed by John Kelly used by investors to calculate what percentage of their money they should allocate to each investment.
Which investors use Kelly Criterion?
Popular investors like Warren Buffet and Charlie Munger, along with legendary bond trader Bill Gross.
Who developed the Kelly criterion?
The Kelly Criterion was proposed by John Kelly in the 50’s who at that point was working for AT&T’s Bell Laboratories.
What is the formula for Kelly criterion?
The Kelly Criterion formula is K% = W – [(1-W) / R]. Here, K% stands for Kelly percentage, W stands for winning probability and R stands for the ratio of winning or losing.
Kelly Criterion is used for?
Kelly criterion is mainly applied in the field of investment and gambling. It is used to determine the amount of money one should bet in a single round.
Say you have got a brilliant idea for a startup that can change the way we see things, that solves a problem that everyone needs a solution or boosts the economy. But you do not have enough money to put your vision into being. Sure, there are a lot of ways in which a startup can get funding to establish the foundation of the business. But given the fact that three out of four startups fail, who would like to take the risk to invest in a newfound business?
Capital and startup go together, that is where a VC (venture capital) firm comes into the picture. But if you are not very familiar with the term. Continue reading with us to get an idea of what a venture capital firm is.
People involved in a Venture Capital firm include entrepreneurs, investors, investment bankers, and venture capitalists. A venture capital firm will invest in your business with the aim of a good ROI (Return on Investment) and have a stake which is usually less than 50% in the ownership of your startup. The other main goals include exiting the investment. Either by selling off their stake or through an IPO (Initial Public Offering) at a profit and giving back to its investors.
A venture capitalist firm is run by venture capitalists who raise venture capitalist funds by taking money from other people and investing it into promising young companies. These firms could clearly outline which industry they want to invest in. Who are the people they are looking for? What kind of funding do they want to do? At what stage of your business? And how much money are they willing to pool in?
Stages of Funding Rounds
Pre-seed funding round: Investments in startups are known as private equity or venture capital. Despite their high risk, these investments also have a greater chance of exponential growth.
Seed funding: This is the earliest stage in the process of raising capital for your startup.
The A-series: Funding is for when the company has established product and market fit, started to make some serious buzz and its customer base is growing fast.
The B Series: This represents a period when the firm generates significant revenue in particular markets and looks to expand its reach.
The C series: Eventually, the company will expand and operate globally. If it is ready for an IPO, it may be purchased by another company or continue operating as a private company.
Other Ways of Fundings for a Startup
Besides Seed Funding, there are other ways too, by which a startup can collect funds, some of the common ways are:
Bootstrapping is a method of raising pre-seed funds. When a startup bootstraps itself, it means that it launches without the help of external investors. Thus, the cash flow produced by the business itself fuels internal growth. A bootstrapped business may raise capital through customer funding, personal debt, or personal savings in its initial stages, which works as an effective model for some new companies. However, bootstrappers may face cash flow issues due to high levels of personal stress.
Governments or industry-specific organizations provide grants to these startups for entrepreneurs who do not wish to give up equity, grants are another alternative for venture capital.
Family, friends, and relatives are usually the first ones to support and invest in your startup. When you haven’t achieved much success or haven’t done anything, that can prove a tangible return on investment. In this scenario, your stakeholders may have limited or no experience with venture capital. Known as the three F’s (Friends, Family, and Fools), this is considered the fourth type of pre-seed funding.
Pre-seed accelerator programs are the fifth type. Through these programs, founders learn lean startup practices, develop a scalable and repeatable business plan, and show some product-market fit to attract early customers to their product.
Lastly, crowdfunding can be used for pre-seed funding, and here financing is approached differently. A crowdfunding campaign is a way of raising money from many individuals in small amounts, often online. The types of crowdfunding include equity-based, reward-based, debt-based, and donation-based.
Check out the Top 10 active VC Firms in India in 2022.
Tiger Global Management
Founder: Chase Coleman III
Established: 2001
Investment stage: Series A to pre-IPO stages of companies
Industry: Software, Consumer, and FinTech
Portfolios: 763
Headquarters: Mumbai
Tiger Global Management based in New York has affiliate offices in Hong Kong, Beijing, Singapore, and Bangalore. It is one of the most active global tech investors and follows a long-term-based investment approach to generate superior risk-adjusted returns for its investors. They started their public equity in the year 2001 and private equity in 2003 making investments in growth-oriented private companies from early to late stages.
Last year it was listed under the list of the world’s biggest unicorns with most of the co-investors in the company being Accel, Coatue, and DST Global. Some of their notable investments include companies like Shein, Meta (formerly known as Facebook), Coinbase, AirBnB, Uber, SoftBank, and more. Their latest fund size as of March 2022 is $12.7 billion.
Omidyar Network India
Founder: Pierre Omidyar
Established: 2004
Investment stage: Early-stage enterprises
Industry: Digital Society, Education, Emerging Tech, Financial Inclusion, Cities & Innovation, and Property Inclusivity
Portfolios: 100+
Headquarters: Mumbai
Omidyar Network India
Omidyar Network India is a part of the Omidyar Group, whose organizations and initiatives are supported by philanthropists Pam and Pierre Omidyar, founder of eBay. This period represents a period when the firm generates significant revenue in particular markets and looks to expand its accompanies to fast-track its growth. As well as giving access to the Center of Excellence Board for strategic and operational inputs.
They have a total of 102 active investments, raising the combined fund size to around $417 million. Few notable clients of Omidyar Network India are 1mg, Quikr, WhiteHat Jr, Zest, etc.
Accel
Founders: Jim Swartz and Arthur Patterson
Established: 1983
Investment stage: Pre-seed, seed, early, and growth-stage investments
Industry: Computing and Storage, Infrastructure, Consumer, Internet & Media, Enterprise Software & Services, Mobile Networking Systems, Retail Consumer, Security, Technology Enabled Services
Portfolio: 1840+
Headquarters: Bengaluru
Formerly known as Accel Partners, Accel has backed up some of the most successful companies like Flipkart, Dropbox, Etsy, Facebook, Spotify, Slack, Vox Media, and many more over the past thirty-five years. Accel has a global community of entrepreneurs and has been investing in private companies from their pre-seed, seed, early, and growth-stage investments.
Founded in 1983, Accel has been one of the most active venture capital firms in Silicon Valley still going strong with their core principles, completing thirty-five years in the industry last year. The company values collaboration, placing the group above everything else, and creating investors from within. Accel continues to move forward with its Silicon Valley state of mind. Their most recent investment made was $57M raised by Middesk in June 2022.
3one4 Capital
Founders: Pranav Pai and Siddharth Pai
Established: 2015
Investment stage: Early-stage venture capital fund
Industry: Fintech, consumer products, SaaS, digital media, climate tech, and digital health
Portfolios: 50+
Headquarters: Bengaluru
3one4 Capital
3one4 Capital is a venture capital firm based in Bangalore, India. Specialities include investment in startups based in early stages, seed capital and early investments. The firm works with the founding team, bringing in subject proficiency to find the best strategy for the product market for defensibility, revenue growth, and creating an impact. Focused on delivering uncompromised end-user experiences, curtailing risk, uncovering new growth opportunities, and yielding rewarding outcomes for all the stakeholders involved.
Interested in the intersection of adjacency that is large, growing, and ready for unique products and services and select market categories, the VC firms’ investments are biased towards companies exploiting technology to create, grow, or dominate large markets in India. Notable investments by 3one4 Capital include companies like Licious, Darwinbox, Jupiter, Betterplace, Open, Bugworks, Koo, Dozee, and Tracxn.
Kalaari Capital
Founder: Vani Kola
Established: 2006
Investment stage: Seed and A Series
Industry: Technology-oriented companies
Portfolios: 110+
Headquarters: Bengaluru
Kalaari Capital
Started in the year 2006 by Vani Kola and headquartered in Bangalore, Kalaari Capital is an early-stage technology-focused venture capital firm based out of Bengaluru, India. Kalaari continues to empower and work with visionary entrepreneurs that build unique solutions that reshape the way Indians live, work, consume and transact. Kalaari partners early with founders and works with them to navigate the inevitable challenges of fostering ideas into successful businesses.
Kalaari believes in being authentic, perceptive, and responsive. Accelerate and enable your firm to give importance to your potential more than your pedigree.
Blume Ventures
Founder: Karthik and Sanjay
Established: 2010
Investment stage: Seed-stage and early-stage companies
Industry: Business products, business services, consumer products, consumer services, financial services, healthcare, information technology, manufacturing, cybersecurity, big data, e-commerce, blockchain, cannabis, business-to-business payments, mobile commerce, Esports, TMT, gaming, and technology-based
Portfolios: 100+
Headquarters: Mumbai
Blume Ventures
Bridging the gap in the Indian market between local angel networks and larger global venture capital firms, Blume Ventures is a key player in India’s startup ecosystem and has backed up and built many transformational networks ever since. Backing up ventures that trigger a fundamental change in consumer behaviour, impacting larger markets, and solving problems that are difficult and uniquely Indian in nature.
The testimonials clearly treat companies as customers, not just as portfolios. Offering more than just financial help, being friendly, being open-minded, and collaborative in their efforts. Blume Ventures has managed over $280M+ in Capital, backed up more than 150 Startups, and made 24 Exits. Ventures like Purple.com, HealthifyMe, Dunzo, Turtlemint, Locus, and more have been backed by Blume ventures.
Helion Ventures
Founders: Rahul Chandra, Ashish Gupta, Kanwaljit Singh, and Sanjeev Aggarwal
Helion Ventures helps organizations build based on strategies and in making strategic choices. It is a $605 Million India-focused VC firm. That supports early to mid-stage venture funds investing in technology-powered and consumer service businesses in sectors like Outsourcing, Internet, Mobile, Technology Products, Retail Services, Healthcare, Education, and Financial Services. Mainly focusing on making investments based in India. Some notable investments were made in ventures like BYJU’S, Gupshup, Ola, LivSpace, Toppr, and more.
India Angel Network
Founders: Padmaja Ruparel, Raman Roy and Saurabh Srivastava
Established: 2006
Investment stage: Early-Stage Venture, Seed
Portfolios: 160+
Headquarters: New Delhi
India Angel Network
The members of the India Angel Network lead from the front, having strong operational experience as CEOs or a background in creating new and successful ventures. The advantages of working with the firm are they are willing to invest money and time, have the ability to leverage a vast network, and give quick feedback on investment decisions.
Keen to invest in startups based in their early stages, the India Angel network provides quality mentoring, and vast networks give input on strategies and move ahead with its execution. Working with sectors as diverse as Agriculture, E-Commerce, Education, Financial Services Gaming Healthcare Hospitality, information, and more. A few notable investments of India Angel Network are WOW momo, Zippr, Wiwigo, Pikkol, etc.
Mumbai Angel Network
Founder: Nandini Mansinghka
Established: 2006
Investment stage: Early-stage investments
Industry: Technology, consumer, life sciences, defence technology, space technology, electric vehicles
Portfolios: 200+
Headquarters: Mumbai
Mumbai Angel Network
The Mumbai Angel Network invests in a wide variety of domains such as—technology, consumer, life sciences, defence technology, space technology, electric vehicles, and hemp seeds. They have over seven hundred investors in more than sixty cities around the world and are focused on new venture investing. The premier private investment platform has invested more than 150 crores with a base of more than 700 investors.
The portfolio of Mumbai Angel Network includes startups like Snackible, LegalKart, Barneys, Brainwired, etc.
Founder: Nikhil Vora (Ex-Managing Director of IDFC Securities), Swati Nangalia Mehra
Established: 2014
Investment stage: Seed, A Series, B series, and more
Industry: Transportation, Logistics, Supply Chain, and Storage
Portfolios: 60+
Headquartered: Mumbai
Sixth Sense Ventures
Known as India’s first domestic consumer-centric venture fund. The Sixth Sense Ventures combines foreseeing a trend together with deep insights and delivers a clear vision. The sixth sense has a focus on Indian start-ups and leads with an immensely powerful team. Having cumulative experience in the wider consumer domain, their core team has a strong Center of Excellence Board.
The company creates value for both investors and invested companies. The firm has strong consumer-centric research and investment analysis in its ecosystem, making it easy for companies to fast-track their growth. As well as giving access to the Center of Excellence Board for strategic and operational inputs. The portfolio of Sixth Sense Ventures includes startups like Ethos, Bira 91, AVG Logistics, MyHealthcare, etc.
Conclusion
The venture capital firms in India are growing at a fast pace and supporting budding entrepreneurs with not only money but also guiding them by mentoring them and helping them grow in various aspects of different industries. Helping entrepreneurs and their startups achieve success against all odds.
