Nowadays the Biggest Hurdle that came in front of Startup is to acquire Series-B/Mid-Stage Funding. After Acquiring Series-A/Initial Funding Investors also expect early returns but actually it is the Mid-stage Investment after which the Startup start maturing. If both the Founders & Investors didn’t show patience till the Mid-Stage Funding round then the result is similar to most of the startups that shut down every year due to cash crunch.
Pooling Domestic Capital for Mid-stage investments is being seen as a sign of Maturity in the Indian Startup Ecosystem, where there is an Abundance of Early Stage Money from Angel Investors and Venture Capital firms
Hi Everyone Today We Will Talk About How the Investors are Focusing On Series B Funding in Indian Startup Ecosystem
Large venture funds such as Accel India and Nexus Venture Partners focus on Seed and Series A Deals, though some new ones like Zodius Capital and Iron Pillar are mobilising domestic capital to focus on Series B Funding. Several Global Venture Capital firms like Sequoia Capital, Norwest Venture Partners and Bessemer Venture Partners are also Active Series B Investors.
Crowdfunding platform LetsVenture estimates that just 9 out of all the startups formed in 2010 have been able to Raise Series B, or late-stage, capital so far. While 28 Startups from the cohort of 2014 have Received Series A Funding, just 3 have been able to Raise Series B Capital.
Accel Partners, has invested in Bengaluru-based pi Ventures $30-40 Million fund. pi Ventures had recently closed its first $13 Million from Investors including Flipkart’s Binny Bansal, MakeMyTrip’s Deep Kalra, Info Edge’s Sanjeev Bikhchandani besides prominent angel investor Mohandas Pai.
pi Ventures had also received capital from the Small Industries Development Bank of India (SIDBI) besides family offices from the USA, Canada, Singapore and India.
pi Ventures, which was Co-founded by Manish Singhal and Umakant Soni in 2016, will invest in Early Stage Startups that focus on Solving Problems in Healthcare, Logistics, Retail, Fin-tech and Enterprise Sectors using Artificial Intelligence (AI), Machine Learning (ML) and Internet of Things (IOT).
Accel has also backed Ideaspring Capital, which makes Seed Investments in Product Startups and Jungle Ventures, which invests primarily in South-east Asia.
Kirani, however, did not reveal the amount that Accel Partners has invested into pi Ventures.
IFC PROPOSES TO INVEST $3M
Additionally, the International Finance Corporation (IFC), the World Bank’s Financial Arm, has Proposed to make an Equity Investment of $3 Million in pi Ventures as well. The investment is through the IFC Startup Catalyst (ISC) programme and is intended to support local innovation and entrepreneurship.
“The (IFC) process is still on. We are very excited about Accel investing in us. We have taken a lot of guidance from them in making this fund. There is a lot of synergy ,” said Manish Singhal, founding partner, pi Ventures. “The colour of investors will change in the final close. We will get support from larger institutional players, primarily fund-of-funds, whose mandate is to invest in funds. We are also looking at corporates (which aim to) invest in funds and large family offices,” Singhal Said.
Nandan Nilekani Teams Up With Helion’s Sanjeev Agarwal to Setup VC Firm to Fund Mid-Stage Startups
Infosys co-founder and Aadhaar architect Nandan Nilekani is teaming up with venture capital investor Sanjeev Aggarwal to set up an investment firm that will back mid-stage startups, according to 4 people aware of the plans.
The fund, with a corpus of at least $100 Million, will consist mostly of personal capital pooled in by the technology titans, who made their fortune in India’s outsourcing boom. The rest will come from “friends and family”, the sources said.
“Nandan and Sanjeev are expected to contribute 30-40% of the corpus, and they are also looking to rope in a third partner,” said one of the people cited above.
In a departure from venture capital industry practice, the fund, whose name could not be ascertained, will not pay 2% of the total corpus as annual management fee to fund managers, said the people cited above. The eventual fund size could vary between $100 Million and $150 Million, these people added.
Nilekani, who unsuccessfully contested the 2014 Lok Sabha elections after stepping down as chairman of the Unique Identification Authority of India (UIDAI) has since emerged as a prolific Startup Investor. Estimated to have a net worth of $1.7 Billion, according to Forbes, the 61 Year Old has backed over half a dozen startups in the past year. His biggest bet so far is a $10 Million investment in ShopX, which builds technology for small retailers.
Industry observers feel Nilekani, who has chosen to back startups that solve local problems, could direct the investment pattern of the new fund in a similar direction.
Aggarwal is the Co-founder of Helion Venture Partners, which manages a corpus of over $600 Million. The fund saw a split last year, when 3 of its partners left to float investment firm Stellaris Venture Partners. Since then, Helion has put on hold plans to raise a New fund.
Before he helped set up Helion, Aggarwal was the founder of Business Process outsourcing firm Daksh, which was acquired by IBM for $150 Million in 2004.
The new fund will seek to gain from Aggarwal’s successful track record as a Series B Investor, having backed companies such as Grocery Portal BigBasket, Online Marketplace ShopClues and Travel Portal MakeMyTrip.
Nilekani and Aggarwal’s decision to pool domestic capital for late-stage investments is being seen as a sign of maturity in the Indian startup sector, where there is an abundance of early stage money from angel investors and venture capital firms.
“This indicates a sort of maturing of the ecosystem, and in this aspect we are following China,” said Rutvik Doshi, director at venture capital firm Inventus. “It also reduces reliance on foreign investors, who sometimes go by the swings of macroeconomic thesis,” he added.
“It’s a very interesting strategy. I think there is a massive series A and B crunch in the market right now,” said an investor who confirmed the news about the fund but requested anonymity.