Elevation Capital Funding: Swiggy, Paytm’s First Backer, Elevation Capital, Raises Its Largest Indian Fund to $670M

Bangalore/ Mumbai: Start-up investor Elevation Capital (formerly Saif Partners) – which has backed Swiggy, Paytm, Urban Company and Meesho – closed its eighth India-dedicated fund at $670 million, its largest ever.

It comes as signs of slowing funding and global macro headwinds are hurting tech investments and valuations globally. It also follows a $400m fundraise by the venture capital firm under its India-focused Fund VII in October 2020, which coincided with the start of a boom period without precedent for Indian startups as record capital flowed into the country.

As the pace of funding begins to slow, Elevation said it will seek to deploy the new capital over a three-year period, unlike the previous fund which was aggressively spread across more than 30 startups.

Last month, Accel, one of India’s largest venture capital funds, announced the closing of its seventh fund at $650 million, while its Silicon Valley counterpart, Sequoia Capital, is on the on track to rack up $2.8 billion for its latest fund for India and Southeast Asia, according to informed sources, pointing to the ever-growing pool of committed capital to seize the India opportunity .

ETtech

In fact, 2021 has been a banner year for new venture capitalists like
Stellaris Venture Capital,
A91 Partnersand Sixth Sense Ventures, all of which doubled or tripled the size of their funds.

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Elevation, known for keeping its fund between $300 million and $400 million even as its peers have raised much larger funds in recent years, said it was now at an inflection point. Elevation will continue to invest only in India, while most of the biggest venture capital funds have diversified into Southeast Asia.

“With a bigger check, we can show a lot more conviction, even more than we’ve had in the past…it will help us write bigger checks in the first round itself – at the seed stage or Series A,” said Mukul Arora, who was recently promoted to co-manager with fund founder Ravi Adusumalli. “It also enhances our ability to support portfolio companies much later in their journey.”

Arora said sectors such as Software-as-a-Service (SaaS), web3 and crypto will be the new areas of focus and therefore an expanded corpus would help them take bets.

Elevation CapitalETtech

Elevation raised a new fund in a short 18 months, in part due to an acceleration in the growth of technology companies, Arora added. “Last year, we made more than 2x the investments compared to previous years and this also led to a relatively shorter funding cycle… We will return to the three-year deployment cycle,” he said. -he declares.

Deepak Gaur, Partner, Elevation Capital, said: “There has always been very strong demand from investors (limited or sponsors) to increase the size of the fund, but overall it depends on our assessment of the opportunity to offer the best yields in India. and the size of the opportunity we see.

Arora and Gaur said increasing the size of the fund would not hurt their returns, a risk many companies face when hoarding more dry energy.

The early stage gets strong

Elevation completed approximately 30 transactions last year and will continue to issue checks of $2-5 million in early stages, with capital commitments of up to $25 million over the lifecycle of Elevation. a startup.

“In this new fund, we can do a similar or slightly higher number of transactions, but it will be bigger initial checks and more capital for these companies in the long run, over a three-year period,” said Mayank Khanduja, a Bengaluru-based Partner at Elevation Capital.

ET reported early signs of consolidation and a slowdown in trading since the start of the year.

Seed and Series A stage funding is still unaffected, said Elevation Capital partner Mridul Arora.

“We think the opportunity set is still very active. If you also look at the seed and the A-series, our activity level is quite active. Compared to last year, relatively speaking, it has gone down, but if you go bottom up and look at the quality of the ideas and the quality of the founders and the depth of the opportunity, we have never been so excited about India,” he said. he declares.

Indian startups raised $36 billion in venture capital in 2021, according to UK-based investment data platform Preqin, making it a landmark year for fundraising, although a group of tech companies have gone public on Indian stock exchanges.

One97 Communication, the parent company of digital payments platform Paytm where Elevation was the first institutional investor, was one of those to make its public market debut, although its stock has been falling since its November listing. .

Mukul Arora said Paytm management’s goal was to strengthen the business on a monthly and quarterly basis. “Basically, we’ve always had a long-term interest in Paytm,” he said.

Will Paytm’s poor performance and the general negative sentiment around the IPO of high consumption, cash-hungry and unprofitable startups hurt the plans of other IPO candidates?

“I would say five years ago people were wondering if Indian tech companies could ever be listed on the stock exchange. Nobody asks us this question… Regardless of what happened in the stock markets, the IPO is not an isolated phenomenon. I think if you look at the broader global markets…so it’s not something India specific what (the drop in tech stocks) happened,” Gaur said. “There are no long or medium term concerns regarding capital flows as well as the ability of (Indian) companies to register.”

Bring diversity

Elevation, which has an all-male partnership, at a time when the lack of diversity among investment firms is a hot issue, Guar said, they were aware of it.

“We know there are many benefits to having diverse perspectives… People need to grow in partnership… We strongly believe that people are promoted from within. significant progress in terms of hiring,” he said.

In recent years, funds like Sequoia Capital and Lightspeed Venture Partners have announced female partners, but the Indian venture capital industry lags far behind its global counterparts when it comes to the presence of female fund decision-makers.

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