The family office of Ajay Piramal is stepping into venture capital investing to get a slice of the fast-growing entrepreneurial ecosystem in the country. Known as being one of the savviest value investors in India Inc, Piramal is backing the newly floated Montane Ventures, an early-stage fund, as its anchor investor, a first such move by an Indian business conglomerate.
Piramal’s family office, sources said, is ploughing as much as $50 million into Montane Ventures, which plans to raise up to $150 million with participation from external investors, going forward. The Piramal group, however, did not disclose how much the family office has invested in the fund.
Celebrated as an ace dealmaker, having reaped windfall gains by selling stake in telecoms major Vodafone, Piramal, whose diversified group has interests across pharmaceutical, finance and private equity, would stand out as one of the first Indian business leaders to propel a pure-play venture capital fund.
Others like Ratan Tata, N R Narayana Murthy, Azim Premji, Mukesh Ambani and Sunil Mittal, too, have funnelled investments into emerging businesses either privately or through their family offices. However, none of these business tycoons has spawned a VC fund by becoming its largest limited partner.
Montane Ventures, registered as an Alternative Investment Fund, will make seed and series A investments across technology, cross-border and consumer startups and will compete with the likes of India Quotient, Kae Capital, Blume Ventures, Orios Venture Partners, besides others.
The fund will be steered by former Footprint Ventures co-founder Josh Bornstein along with Peter DeYoung, Piramal’s son-in-law, as its director. Bronstein’s past India investments through the early-stage fund Footprint Ventures include Hector Beverages, makers of Paperboat, and Mast Kalandar, a quick service restaurant chain, among others.
“The Indian venture capital ecosystem has evolved dramatically over the past decade, especially as the quality of entrepreneurial teams has increased exponentially. Most of the VCs are now investing from funds with more than $250 million under management. Therefore, a gap exists in the market for funds to write traditional large seed and Series A cheques,” Bornstein said.
He said the ideal fund size would be between $100 million and $150 million targeted at early-stage investments.
The Mumbai-based group’s entry into early-stage investments is noteworthy as foreign funds have largely dominated the Indian venture space, which has gathered momentum in the past few years.
Sequoia Capital, Nexus Venture Partners, SAIF Partners, Accel Partners, Kalaari Capital and Matrix Partners have emerged among the prominent early-stage investors in the current boom cycle.
“The Piramal family office, which is the anchor investor in Montane Ventures, has watched the venture capital asset class for a number of years. As valuations begin to drop to more realistic levels in 2016, we believe that now is a compelling time to deploy capital in early stage companies,” DeYoung said.
Piramal’s bet on the early-stage investment space comes at a time when a global economic slowdown has stymied startup funding in recent months across the world, with India seeing a considerable pullback from investors.
Venture capitalists, Wall Street hedge funds led by Tiger Global, and deep-pocketed investors like SoftBank and DST Global, along with crossover funds, have provided capital to domestic startups with the momentum going up significantly in the past two years.
The years 2014 and 2015 witnessed unprecedented fund flows into consumer internet ventures, with valuations ratcheting up like never before. At the end of 2015, more than $7 billion was raised by venture capital-backed entities across 870 funding rounds, data collated by startup tracker Tracxn said.
Source: The Times of India
Image Courtesy: Times of India
