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For almost six years, Trifecta Capital has been operating as a venture-debt fund with a stellar portfolio of 20 unicorns and soonicorns. These include names like Big Basket, Pharmeasy, Cars24, Vedantu, ShareChat, DailyHunt, UrbanCompany, CarDekho, Blackbuck, Ninjacart, NoBroker, Mobikwik, Ixigo, and BharatPe among others.
Now, at a time when venture debt is on the rise in the ecosystem, the firm has launched a late-stage venture capital fund —Trifecta Leaders Fund I. BusinessLine spoke to Lavanya Ashok, Partner at Trifecta Capital about the vision behind the new fund:
Q: Why did Trifecta choose to launch an equity fund after operating as a venture-debt fund for almost half a decade? Especially, when we are seeing a rise in venture debt deals in the ecosystem.
About two years ago, we started to see that a lot of companies we gave venture debt to, had broken out to become category leaders and were showing exceptional equity rewards. In a lot of cases, when a company reaches a certain scale, maturity, and size, they become quite bankable by banks and NBFCs. So, venture debt naturally gets paid off and then becomes a less important part of the capital structure. This is why it makes a lot of sense at that point, to take equity exposure in the company if one really likes the prospective equity reward of these companies.
Further, we had deep relationships with these companies because they had raised companion capital (venture debt) from us early on. So we thought about putting together an equity fund to fill a structural gap in the market for $20 million to $30 million cheque sizes and also continue supporting these companies as lifecycle partners.
Q: Will this fund be used to only invest in companies that have raised venture capital from Trifecta in the past?
Nearly three-fourth of the portfolio that we will construct in our equity fund 1 will be companies that at some point Trifecta has been a venture-debt investor of, and one-fourth of the portfolio will be other companies that fulfill the same rigorous criteria of category leadership, revenue, scale, and large market opportunity among other things.
Q: Are you targeting any specific sector with this fund?
Our broadly defined sector is India Internet and the new economy. Within that, we have five to six investment themes that we are really interested in. These include vertical e-commerce, digitisation of essential services across B2B, B2C, SaaS, certain elements of Fintech and Insurtech, content, and social platforms. Further, we are also interested in Bharat-focused business models.
Q: From an investor’s perspective, how do you think upcoming start-up IPOs will impact the companies who have just become unicorns or are in the growth stage?
I think it will give a lot of the other private companies the confidence that there is depth in the public markets. A lot of private companies had this question, whether there is enough depth in the public markets for companies of this scale, to go and list. Zomato IPO seems to have proved that potential for many private companies in India.
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