Stride Ventures to focus more on consumer & fintech, cut exposure to B2B startups

As it looks at its next phase of growth, venture debt firm Stride Ventures will increase focus on investments in consumer, fintech, and cleantech startups and reduce exposure to the B2B sector.

The firm announced its fourth fund in India, its largest so far, with a target corpus of $300 million.

Stride Ventures, which recently crossed the $1-billion investment mark in India, is also ramping up focus on late-stage startups, managing partner – India Apoorva Sharma, told FE.

Apart from expanding in India, Stride Ventures is looking to build its portfolio beyond the Indian shores as it expands presence in the UK and the Gulf Cooperation Council.

“We have reduced the focus on B2B startups, especially companies with razor-thin margins and high cash conversion cycles. We want to invest in companies where real value is being generated,” Sharma said.

Nearly 40% of Stride Ventures’ portfolio consists of consumer startups like Bira91, Blissclub, BlueStone, Pilgrim, Paperboat, and Pepperfry, among others. Apart from consumer startups, the company will also continue to invest in fintech and cleantech startups.

“The three together make up 60-65% of our current portfolio. These sectors have inherent debt requirements and scope to scale,” Sharma said.

Over the past 12 months, Stride Ventures has focused on late-stage startups such as Ather, Upstox and Lohum, she added. The fund will continue to invest in early-stage startups, but will also look at meaningful investments in late-stage startups, going forward.

The firm provides loans to startups, and part of the loan (under 10% in most cases) has warrants that can be converted to equity at some stage. With more startups in its portfolio looking at going public, Stride Ventures will look at making profitable exits from these firms where they have a seat at the cap table.

For international markets, the fund is looking at investment strategies for each market with a local lens. For the GCC region which encompasses markets like the UAE, Qatar, and Saudi Arabia, Stride Ventures finds more affinity in fintech startups.

“We have identified financial services as the biggest segment in the GCC region. As the region diversifies from the oil economy, financial services and food security are up-and-coming segments and we intend to capture this opportunity,” Sharma said.

In contrast to India, the socio-economic fabric of the region does not lend well to consumer startups. There are many known global brands on offer in the GCC markets and people have been used to buying them, making homegrown consumer brands few and far in between. “In India, there is more diversity and hence more affinity for homegrown brands,” he added.