Lenskart-backer Epiq Capital raises $225 million in Fund II, to double down on India investments

Epiq Capital raises $225 mn in new fund

Mumbai-based Epiq Capital, which has backed unicorns like Lenskart and Dailyhunt, has raised $225 million in its second fund to double down on its India investments, adding to the stack of venture capital dry powder in the country.

The growth and late-stage investing company said on June 28 Alternate India Investment (AIF) Category-II was oversubscribed. Domestic and global investors, including leading tech entrepreneurs, industrialists, sports and entertainment leaders, family offices, sovereign wealth funds, were its limited partners (LPs) for the fund.

It plans to invest in about eight to 12 companies with an average cheque size of around $20-25 million. Epiq Capital manages assets worth $300 million and the cumulative valuation of its nine companies is around $15 billion.

Founder and managing partner Rishi Navani said that the VC raised the fund in FY23, the hardest time to raise fresh capital in India in the past eight years.

"But LPs believe in the India story, they believe in the India tech story. They looked at our track record of not just returns but also how our portfolio companies are performing,” Navani said at a press conference.

“We have at least four companies — Lenskart, Cure.fit, Builder.AI and Dailyhunt — that are close to achieving profitability or have already achieved profitability and are certainly free-cash-flow positive."

They will also look at initial public offerings (IPOs) in the next 18-36 months, Navani said.

Next year, Lenskart will be a $1 billion revenue company, while Pristyn Care is close to having revenue of $100 million, he said.

Diverse portfolio 

Founded in 2016 by Navani, who also co-founded Matrix Capital India along with Avnish Bajaj, Epiq Capital has raised one fund earlier and invested in nine companies.

Besides Lenskart and Dailyhunt, the company has invested in unicorns like Pristyn Care, Cult.fit, and also soonicorns (soon to be unicorns) like edtech startup Teachmint and MSwipe.

The company was also a backer of home rental startup Nestaway, which got acquired by Aurum Proptech, a listed property technology company earlier this month at a 95 percent discount.

Navani said that the VC's funding was down 35 percent in 2022 from 2021 but still invested about two times of what it did in 2019 and 2020.

Epiq Capital's new fund adds to the already large pile of venture capital dry powder (undeployed money) in India.

In the past 15 months, several private equity and VC firms, including Sequoia Capital India (now Peak XV Partners), Accel, Matrix Partners India, Nexus Venture Partners and Elevation Partners, have raised large India-dedicated funds.

The deployment of capital, however, has been slower due to macroeconomic headwinds. In the recent past, corporate governance issues to have cropped up, making VC firms cautious.

"If there are 10,000 funded startups in India, 10, I would say, are having corporate governance problems," Navani said in response to a Moneycontrol query about such lapses.

"Maybe others also have corporate governance problems, but it is one in 100 so less than 1 percent. Take any other traditional sector… the percentage of incidents over governance is much more higher. It gets discovered more in tech companies because these companies constantly raise funds and have an active diligence process."