Homegrown venture capital firm 8i Ventures has marked the first close of its second fund at $25 million, joining a growing list of private investors to have raised a large India-dedicated fund despite global headwinds.
The backer of payments and digital lending unicorn Slice got investments for 8i Ventures Fund-II largely from family offices like Salgaocars and Kothari (DSP), who also invested in 8i Venture’s first fund, the company said in a statement on November 3.
“Fund-II will have (a portfolio of) 15-20 companies that we will invest in over the next three years (five-six new investments per year),” Vikram Chachra, Founding Partner, 8i Ventures told Moneycontrol
The company expects to mark the final close of the $50-million fund, which was announced in 2021, by March 2023, he said.
First close is a landmark for a VC or a private equity (PE) firm in its fund-raising journey after which these firms start deploying capital.
“We will invest at Seed levels, with a $1.5-$2 million cheque, going up to series B in the winners. While we'll make all the new investments, in the next three years, follow on investments will keep happening up to roughly five years from now,” Chachra said.
Fintechs, e-commerce in focus
8i Ventures would continue to focus on fintech and commerce in India as a seed investor, he said. Within fintech, business-to-business (B2B) transactions and vertical payments solutions are ripe for innovation.
“In commerce, e-commerce enablers and newer e-commerce models that address the next 500 million consumers are areas of interest to us,” Chachra said.
Earlier in a media interview, he had said the company was hopeful of marking the first close of the second fund by April. It got delayed because 8i wanted to do a larger first close at $25 million and wanted certain LPs (limited partners) onboard, he told Moneycontrol.
Founded in 2019 by Chachra and Vishwanath V, 8i Ventures has invested in more than 15 companies. The Mumbai-based company, which largely invests in fintech and commerce firms, has backed startups like Ezetap, which was recently sold to fintech unicorn Razorpay, Tiger Global-backed payments infrastructure soonicorn M2P Fintech and speciality coffee startup Blue Tokai.
A play on unicorn, companies that are valued at a billion dollars or more, soonicorn is a startup valued between $500 million and $1 billion.
Healthy returns
8i Ventures said it gave 36x returns to its LPs on its two-year-old seed investment in M2P Fintech. Its first fund, through which it invested in Slice, is up 270 percent, thanks to its early investments in Slice, Blue Tokai and M2P Fintech, it said.
8i Ventures also said it returned 27 percent of its capital to investors.
8i Ventures is the latest VC firm to raise a large India-dedicated fund, joining the likes of some of the world’s biggest players, including Sequoia Capital, Accel, Elevation Capital and Matrix Partners.
Data compiled by Moneycontrol shows that 13 India-dedicated PE/VC firms have raised over $6.5 billion from limited partners in 2022. However, investors still expect the much-talked-about funding winter to last for another 12-18 months.
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