Backer of companies like Swiggy and Urban Company, Bessemer Venture Partners is now eyeing investments in SaaS (software-as-a-service)-enabled marketplace companies, which might be mostly B2B companies.
Speaking to BusinessLine, Vishal Gupta, Partner at the global VC firm said that Bessemer’s consumer internet roadmap in India has been evolving over time. In 2011, the firm started investing in consumer internet with listing marketplaces like Bharat matrimony, and Snapdeal. Then moved to investing in full stack marketplaces like BigBasket, Swiggy and then invested in D2C marketplace Myglamm in 2019.
“Now, we continue to look for more categories in D2C than we can invest in outside of beauty. We are now also looking at more SaaS enabled marketplaces with software embedded into the ecosystem, which may turn out to be more B2B because they are SaaS enabled,” Gupta added.
Bessemer has invested in Indian unicorns like Swiggy, Urban Company, Ola, BigBasket, and LivSpace among others. Commenting on the firm’s interest in marketplace businesses in India, Gupta said, “Marketplaces thrive when both sides (demand and supply) of the world are fragmented. In India, a lot of the supply side is fragmented across different categories. So the more fragmented the supply, the better the marketplace can be because you have pricing power on both sides.”
He added that once a marketplace business is built, it is very hard to replicate. These businesses usually end up being monopolies, duopoly or oligopolies and thus the value generation is much higher.
Last November, Bessemer had raised a $220 million India-focused fund for the first time in its 15-16 years of investing in the country. Also, earlier this month, Bessemer announced the closing of $4.6 billion in new capital across two funds—$3.85 billion for its twelfth flagship fund, BVP XII, and $780 million for its inaugural BVP Forge fund.
Market downturn impact
Much has changed in the markets after the launch of Bessemer’s India-focused fund, a global funding slowdown has pushed startup companies to cut costs, halt IPO plans and increase focus on profitability. However, Gupta says Bessemer’s investment strategy has not changed in the market downturn and the firm continues to invest at its usual pace. This year, Bessemer has already closed three investments and is in talks with another three companies.
Commenting on the impact of the market downturn on its portfolio companies, Gupta noted that major cost-cutting has been in terms of rationalising business expansions which were not core to the company and employee costs. However, he added that it is not the case with every management team and there are many companies in the firm’s portfolio where the plans have not changed drastically because of the current market environment.