Bessemer Venture Partners, an investor in start-ups such as Swiggy, Urban Company and PharmEasy, has closed its first India-dedicated fund of $220 million, doubling down on the country’s booming internet economy.
While Bessemer has not been as active in India as other Silicon Valley venture firms like Sequoia, Accel and Lightspeed, its partners say, it prefers going deeper into its existing companies, instead of acquiring small stakes in multiple companies in wide-ranging sectors in the hope that a few make it big.
The new fund also marks an about-face in its plans, since there were rumours of Bessemer planning to exit the India market a few years ago, led by a lack of exits. However, companies such as Zomato, Nykaa and Policybazaar have listed on exchanges to record demand, giving investors comfort and the confidence to remain focused, people close to Bessemer said. Bessemer’s own portfolio company PharmEasy filed for a listing last month, looking for a valuation of about $8 billion.
“Our capital deployment pace has not changed much except for a few months here or there. We prefer having a concentrated portfolio,” said Anant Vidur Puri, partner at Bessemer. “Our general philosophy is to invest more in our existing portfolio. We actively lead follow-on rounds.” He cited PharmEasy’s example, where Bessemer led its seed, Series A and Series B rounds.
From the new fund, the company plans to make 10-15 investments of $1-50 million across Seed to Series C stages of internet start-ups over the next three years or so. Its investment areas include consumer internet, marketplaces, fintech and software-as-a-service.
Funding boom
Bessemer’s fund also coincides with an unprecedented start-up funding boom. Companies have raised over $30 billion from investors in the 11 months of 2021, more than double of previous records. Investors are often making investments driven more by FOMO (Fear of Missing Out) and less by conviction on a business model. Bessemer wants to avoid this.
“Our differentiator is that we won’t chase a hot trend. We have a point of view and want to go deep into companies. You won’t find us doing deals at insane valuations,” Puri said.
“This is a long and patient capital game. Valuations go up and down, that is part of the cycle,” said Vishal Gupta, partner at Bessemer.
Globally, Bessemer manages over $10 billion in assets, and has invested in companies such as Shopify, LinkedIn and Discord.
Not in the lending game
While fintech is one of the firm’s focus areas, Gupta said, it will avoid balance sheet plays or non-bank lenders, which either start-ups have become or acquired, rather than being a pure marketplace.
“We are looking for fintech software plays and a differentiated business model. We don’t want to get into the balance sheet plays. It is not that NBFC is a bad business, but you have to be clear that it is capital-guzzling and will take a long time to build. It is not a hyper growth business,” Gupta said.
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