Over the next four years, Bertelsmann India Investments (BII) expects to invest upwards of $500 million in Indian start-ups.  

BII is the strategic investment arm of German multinational company Bertelsmann, which has been operational in the country for the past seven to eight years. Pankaj Makkar, Managing Director of BII, told BusinessLine that the firm has received fresh capital to invest in the Indian market. 

“With the fresh capital, the idea is to continue doing early growth stage companies (Series B, C) and even do a little early-stage round such as Series A. The firm’s average ticket size will be $10 million - 15 million for first-time cheques and it will do about five to seven new deals a year in addition to the follow-on rounds,” Makkar added. 

Focus on tech

In terms of themes, BII will be investing in anything related to technology — technology companies or tech-enabled companies which are significantly organising the market. Talking about the increased investment size and number of deals, Makkar said that the change in strategy is backed by the maturity in Indian startup ecosystem which makes the firm comfortable in making a deeper bet. 

“Also, we feel that we have built a massive brand in the country when it comes to mid-stage investing or early growth investing. We are probably among the top three VCs in mid-stage investing category. Now that we have built that kind of brand name, we want to capitalise on it by doubling down on building a much larger business,” he added. 

BII is an investor in companies like LendingKart, Licious, Pepperfry, Eruditus, Agrostar and Rupeek, among others. Out of these, LendingKart and Pepperfry have announced plans to go for a public listing. Makkar expects the upcoming LIC IPO to be a big moment for the Indian IPO market, acting as a litmus test of whether the investor interest is back or not. If the market is back after LIC IPO, he said, significant activity will happen on the IPO front from tech companies.

“In general, start-ups have realised that they need to be profitable or have a clear path to profitability while listing on Indian public markets as the markets like that better than loss-making companies. I think start-ups will now be more conscious of profitability when they go for an IPO. That’s also why we see many companies trimming teams lately. Further, I think start-ups will also value themselves right,” Makkar added.