Innoven Capital, Mumbai-based venture capitalist, says it will invest between $65-75 million in Indian ventures over the next 12-24 months. The fund will scour the education and B2B business spaces for opportunities Vinod Murali, managing director, Innoven Capital told FE.
The venture debt fund will be seen cutting 30-40 deals in all during the year to the tune of $2 million each. “We will continue to avoid the real estate sector but we are watching segments such as vertical e-commerce, hyperlocal and home services,” Murali added.
Investments in Indian start-ups continue to flow in although valuations are trending down. Flipkart was valued at a smaller $11 billion by key investor Morgan Stanley than the $15 billion earlier. Murali said there is more pressure on companies to build robust and profitable models and expects $2-2.5 billion coming into India if companies are able to prove that their business model is differentiated and sustainable.
“Through this year we will see fewer deals but the value will not be different in Series A and Series B funding. There is, however, a vacuum in Series C funding where an entrepreneur needs a $25-30 million for a non-profitable company. This is a challenge which is very evident in the market,” Murali said.
Murali feels venture debt is a more viable option for raising capital for a company which is not making profits and does not have a track record. “Venture debt is important for start-up companies to get some capital alongside equity without diluting their ownership. It will also help them build their track record so that they can access bank finance in 2-3 years,” he said.
Innoven Capital has invested in Snapdeal, PepperTap, FreeCharge, Myntra, Practo, and FirstCry. In 2015, the venture capitalist had invested Rs 275 crore across 27 transaction in India, it shared in a report. Delhi/NCR has emerged as the most sought after city for start-ups with 31% VC-funded companies in the region, followed by Bengaluru and Mumbai, the report added.