Kettleborough VC, a solo general partner (GP) venture capital firm, plans to invest in 10-12 startups from its recently launched Fund II with a target corpus of Rs 60-80 crore. Launched in 2022, Kettleborough completed the deployment of Fund 1 recently. Nisarg Shah, founder, Kettleborough VC, talks to S Shanthi about the reasons behind launching a solo GP firm, the rise of such firms in India, his firm’s standout investments so far and more. Excerpts:
Why did you decide to launch a solo GP firm? What makes this model appealing?
The solo GP VC fund is just an extension of the work that I have been doing till then since 2019, in the form of angel investments and leading syndicates. Starting the fund was a natural succession in the path to get the set-up, capital management and financial engineering in a structured way.
We are seeing Solo GP firms gain popularity outside India. However, in India, it is yet to pick up pace. Do you see many more joining you?
We will incrementally see more solo GP firms coming up in India as the venture market deepens further. It is important to note that the VC industry has existed in the US and China for over 4-5 decades, but in India, it has been there for only two decades. Relevantly, India is maturing in its business and consumption needs, and as capital flow increases further and cycles complete, we will see new solo outfits coming up and money being allocated towards them.
How many investments have you made so far?
Over the past seven years, I have invested in about 30 companies. The pre-fund cohort had about 20 companies, including the likes of Foxtale, Bharat Housing Network and Onebanc. Fund 1 backed 12 companies, including Sumosave, Finhaat, Zippmat, and Inprime. Fund 1 had a corpus of Rs 30 crore, with additional top-ups of Rs 10 crore via co-investments. Fund 2 is expected to be in the range of Rs 60-80 crore, and we shall deploy the same across another 10-12 companies.
What are some of the investments that you are particularly proud of?
A couple of standout investments over the years have been Bharat Housing Network, because of its innovative model for managing lifecycle of secured mortgages and achieving growth with sustainability; Sumosave, because of its full stack model of building a prominent retail chain and growing sharply; Zippmat, because of its savviness in understanding its customer and setting up private brands incrementally; Elivaas, because of its amazing ability to execute and scale at an unseen pace; and Finhaat and Inprime for their big vision to serve middle and rural India with their need of financial products.
What are the sectors you are bullish about at present?
We have a founder-construct specific thesis for investments, requiring a minimum of 10 years of relevant domain experience from each of our founders and first cheques being targeted towards inception capital only. That being said, our major investments have been in financial services (NBFC, insurance), full-stack commerce platforms (retail, marketplaces) and software plays (infrastructure, platforms).
Do you plan to continue this as a solo GP firm? If so, why?
Yes, I envisage the design of my functioning to remain in the same manner for the foreseeable future. It has been to my advantage that the founders are able to associate with my set-up and are able to engage more deeply, owing to a simple set-up, one-person relationship and no bureaucratic processes or hierarchies on the back end. I have not faced much of a problem while dealing with the investments alone since the investment strategy is very concentrated and the portfolio number is not that big.
What are some of the disadvantages of being a solo GP?
While we enjoy a lot of benefits, one of the issues that has been observed is the incompatibility of a solo GP set-up within the construct expectations of large-sized institutional LPs (limited partners), especially in India. The same is not seen as much of a problem in mature markets like the US though.