Pine Labs CEO Amrish Rau, Jupiter founder Jitendra Gupta pair up to raise Rs 300 crore venture capital fund

Illustration: Suneesh K

Pine Labs CEO Amrish Rau and neobank Jupiter founder Jitendra Gupta have banded together to start their own venture capital fund, stepping up from angel investments amid an unprecedented funding boom.

The $40 million (about Rs 300 crore) fund, White Ventures, will be run by Rau’s wife Sweta Rau as CEO, while the fintech duo will serve as advisors, in addition to making up 15 percent of the fund. Moneycontrol first reported the development on October 1.

Other investors in the fund (limited partners) include TVF Capital, Credit Saison, Sequoia India, Hummingbird Ventures, 3one4 Capital, Beenext Ventures and founders such as Beenext’s Teruhide Sato, CRED’s Kunal Shah, Ankur Warikoo, and Prajit Nanu.

“The three of us (Amrish Rau, Sweta Rau, Jitendra Gupta) have made 70-80 investments together and it was difficult to engage with so many companies and keep track of what is happening,” said Gupta.

“Secondly there are 25-30 companies we know are doing very very well. But we were not able to invest in future rounds (as angels typically do not have the money or capability to). So we said let’s put a structure and then double down on what does really well,” he added.

While their angel investments would range from $50,000 to $200,000, the fund could invest as much as $4-5 million. Gupta and Amrish Rau’s portfolio includes fintech CRED, gaming firm MPL, craft beer maker Bira, neobank Open, digital ledger firm Khatabook and delivery company Dunzo. Their combined stakes in these companies-- averaged out-- are worth over 10 times what they invested.

While the new fund will focus on fintech, it will explore other sectors as well. White Ventures will not compete merely on cheque sizes and valuations, as top venture capital firms do.

“People don’t approach us because we promise the most amount of dollars. They approach us for the value we add. We understand the founders’ problems and want to help them in their journey,” Gupta said.

The move comes as founders, who often have more credibility than career investors after having built companies themselves and being in touch with operational realities, are leveraging their vast networks and fundraising ability to become fund managers - a step-up from making angel investments. 

Pine Labs’ Amrish Rau said that the fund’s approach stems from what the founder wants. For example, since the time he funded cross-border banking startup On Juno, the company has pivoted thrice but Rau said, “you just take the money and build whatever you want to build. Because we like who you are and how you think. Our approach to it is a lot more about what is the ecosystem asking for? Who are the good founders? What's a good idea?”

Despite going from angel investing-a more individualistic, carefree world- to managing external money which may come with strings and accountability, the trio of Amrish Rau, Gupta and Sweta Rau wants to maintain the ethos of angel investments. “The whole thesis is to institutionalise angel investments. To play the role the angel plays in a startup’s early days. Of course as a fund you want to do more due diligence, want to help them go to the next level. But the thesis and style doesn’t change,” Sweta Rau said.

Illustration: Suneesh K

Top founders including CRED’s Kunal Shah, Unacademy’s Gaurav Munjal, Livspace’s Ramakant Sharma, and Flipkart’s Binny Bansal are active angel investors, and enjoy spending time with the next generation of entrepreneurs, spotting new trends and learning about sectors outside their expertise.

For example, Gupta said on-demand delivery firm Dunzo, recently funded by Reliance Retail at an $800 million valuation, is his most memorable investment so far. “I was in Bengaluru and I needed a document (from elsewhere in the city). And someone said why don't you use Dunzo. I used the app and loved the experience.”

Gupta was at an investor's office, where the investor brushed him off, saying these companies don’t work. Gupta then met Dunzo founder Kabeer Biswas in Mumbai-- a meeting that went on for three hours and led to an investment.

The new fund also comes amid falling technology stocks in the US and India. Food delivery firm Zomato’s shares fell 30 percent in the last few days while workout bike maker Peloton’s shares have fallen 80 percent in the US in the last few weeks.

“I feel some correction will happen for companies beyond Series A rounds as the growth capital was just getting too much. I think it will happen in the next 6-12 months if the public market remains like this,” Sweta Rau said.