In a world beset with challenges, it gives me immense pleasure to report that our focused approach to identifying and investing in specific startups is starting to pay off.
As you know, we launched the fund with one clear objective: we would not adopt the spray-and-pray approach but would, instead, buckle down and look at domains that would give your investment not just healthy returns, but do so efficiently.
And with a Portfolio IRR of 24.5% in the first Fund, I am happy to report that we are on track as per our investment thesis. Our first fund of US$ 14 mn (INR 90.25 crore) is doing well with over a third of the investments showing strong potential to individually deliver a significant part of the fund corpus – giving the fund a visibility of a 5x return. The six companies (representing 51% of the invested capital) namely, CoveIoT, Momspresso, Uniphore, Rubique, SSTS Inc and GolfLan, have raised subsequent rounds at a 4x+ of our initial investment round. The next four portfolio companies (24% of invested capital) have independent investors leading the subsequent rounds at 1.3x-2.2x of our entry valuation.
For Fund II, the team at YourNest has the most extensive access to prospective investees, and we give our investors exposure to high-growth, under-the-radar, tech start-ups in India. Consequently, we have succeeded in maintaining a funnel approach that has reviewed 9,048 startups since January 2017 before selecting around 9% of them and, eventually, investing in seven; this patient and prudent method is very much in line with our belief that DeepTech and B2B startups require intensive analysis before we can commit your capital to them.
The popular B2C technology domain remains active but demands extensive infusions of capital whereas B2B and DeepTech funding continues to grab half of the early stage venture capital investments. As India moves from a services-led economy to a ‘Product-Nation’, we are seeing increased activity in IP/Patent-led ventures that include Product SaaS, Business SaaS, Tech Products and Platforms as well as Connected Devices like IoT, Robotics. We are confident that several of our portfolio companies will scale up and establish their presence outside the geographical boundaries of India: the process has, in fact, already begun with companies like Uniphore, SSTS Inc (p-cloudy), KaHa Pte (CoveIoT) and GolfLan.
We expect the markets to remain volatile in the mid-term and will continue to stay focused on low-profile, high-potential opportunities where we have the capability to nurture founders and ensure that they succeed, globally.
In conclusion, I would also like to draw your attention to our new corporate identity: the revised logo retains the ethos of our original design but lays stronger emphasis on our abiding philosophy of ‘people-first’. As we reach out across the world and reinforce our commitment to nurturing global market leaders from India, we look forward to your continued support in this mission.
Sunil K. Goyal
September 15, 2018