Technology-focused investment firm Filter Capital has successfully closed its first fund Filter Capital India Fund I with a total corpus of Rs 800 crore. According to the company, 60 per cent of the capital commitment came from domestic institutional investors and family offices including HDFC Fund of Funds, SIDBI, SRI Fund, Oister Global, DSP family office, Akash Prakash (founder of Amansa Capital), and Harsh Jain (CEO of Dream11). The remaining 40 per cent commitment was from international investors.
Nitin Nayar, Co-founder and Managing Director at Filter Capital told FE Aspire that the fundraising stands out notably among first-time domestic funds with a technology focus over the past two to three years.
“Our view has always been that with a Rs 700 – 1,000 crore corpus, we would be able to successfully execute the investment strategy of leading growth-stage rounds in technology-led businesses in India. We are pleased with this outcome, especially considering the challenging funding environment,” said Nayar – the former India head at Warburg Pincus.
Focusing on SaaS, technology services, and technology-led businesses across consumer, financial and business services, Filter Capital has backed more than 30 per cent of its corpus across four investments in SaaS, consumer technology, and B2B services — Capillary Technologies, bus mobility platform Chalo Mobility, e-commerce logistics services firm LoadShare Networks, and healthcare enterprise SaaS company THB.
“We typically enter at the Series B/C stage. By this time, there is enough data to arrive at a point of view on the long-term potential of the business, but the business itself has not yet been rerated,” Sumit Sinha, Co-founder and Managing Director, Filter Capital told FE Aspire.
This strategy at Filter Capital is applicable through (boom and bust) cycles (of startup funding) and has not changed since the funding winter for Indian startups, Sinha said.
Filter Capital’s typical check size is Rs 60-100 crore.
Indian startup ecosystem had recorded a drop across multiple growth metrics in 2023 as investors grew more cautious about spending and growth without a promising bottom line and concerning valuations.
From $25.6 billion in 2022, the funding dropped to $8.3 billion in 2023 while funding rounds also declined to 1,133 in 2023 from 2,781 in 2022, FE Aspire had reported.
While market cyclicality is by no means unique to the Indian startup ecosystem as India’s public markets have also been subject to cycles of both overexuberance and undue pessimism over the past 20 years, Nayar expected periodic bubbles to continue whether in private or public markets.
“We may be one interest rate cut or technology megatrend away from the next wave of exuberance amongst investors and founders,” he added.
Filter Capital expects to have 8-10 companies in the inaugural fund and is on the lookout for four-six more companies. The fund will likely be deployed over the next two to three years.