As Russia’s Sistema Asia Fund Advisory readies to increase its corpus from $50 million to $120 million, the investor has already pumped in money in six Indian start-ups. The fund claims that investments have been made with a 6-7-year exit horizon in mind, by when it expects at least a five-fold return. Dhruv Kapoor, MD, Sistema Asia Fund Advisory, in an interview to Anushree Bhattacharyya, talks about how the venture capital (VC) firm is looking for partners to invest in the fund while it continues to scout for start-ups in India. Excerpts:

Aren’t you late to enter the Indian venture capital market given that VC firms, like SoftBank and Alibaba, Sequoia Capital, among others, have already made serious investments?

When Sistema started the fund in India, the biggest question was how different we can be as an investor as there are enough players which have been here for 8-10 years. We came in November 2015 at a time when the internet business drew a lot of VC investment. But in 2016, the euphoria ended. So after a rough ride in 2016, we believe that the next two years would be the best time to invest in start-ups because valuations would be more rational. So the timing of our entry was perfect. We picked up momentum in the middle of 2016 and invested in four firms. Also, as an investor, we can help companies scale their businesses. That’s what we have done in Russia. The way we run the system is we come in early as an investor and help build an organisational structure, bring in a lot of scale and then potentially list the company.

At what stage of a start-up do you intend to invest?

The best stage to play is at the Series B level, apart from mature Series A companies, and at early Series C. At Series B, companies have already evolved and there is evidence that the product will generate some revenue.

How many companies you plan to invest in and what kind of startups would those be?

We have invested in six companies in around 18 months. Over the next 2–2.5 years, we will probably invest in 10-12 more firms. In a year, we plan to invest in five-six firms. Not only we are stage focused, we are also sector agnostic. We would look at every sector which is powered by technology. For instance, we invest in start-ups that work in the space of enterprise technology, which is software, products, SAS, cloud-based solutions for India or the south-east Asia. We also invest consumer technology-based start-ups, including fintech ones, besides travel and transportation, health, agri-tech, edu-tech start-ups.

By when do you intend to close the fund and what kind of partner investors are you looking at?

We hope to make the first close by end of this year, that is December 2017. But we are looking at finally closing the fund by December 2018. We are looking at a few kinds of limited partners (LPs), including friends of Sistema in Russia – these could be business groups, families, who trust Sistema and want an Indian exposure but don’t have a team on ground. As we have local expertise, we can help them invest in Indian start-ups.