JSW Ventures, the venture-capital arm of Sajjan Jindal-controlled JSW Group, started operations in 2015 with a ₹100-crore fund. The maiden fund that was raised from JSW family, has so far made four investments — Indus OS, LimeTray, Purplle and Overcart.

Now, with nearly 40 per cent of proceeds deployed and remaining to be in this calendar year, JSW Ventures is looking to raise its next fund. In a tete-a-tete with BusinessLine , Managing Partner Gaurav Sachdeva says the second fund will continue investing in technology-led firms, but will write fatter cheques.

You had started the fund in 2015, a difficult year for the venture-capital sector. Now three years later, how has the journey been?

In fact, even 2016 was a difficult year; it helped us as the newcomer in the VC market. As the newcomer, we needed to establish ourself as a platform where start-ups come and raise money. Had there been a high-liquidity environment, it would have taken us longer to establish. So 2015-16 really helped us set our thesis right in terms of the companies we want to work with, technology and operational matrix, among others. There was enough lull for people to hear from us clearly.

How much have you invested from your first ₹100-crore fund? By when do you intend to deploy the remaining and what are your exit strategies?

About 40 per cent of it has been deployed in four companies. Of the remaining, we will make 2-3 more investments in this calendar year, while we will also write follow-on cheques, covering the remaining 60 per cent. We have been investing in consumer, consumer internet and enterprise, and will continue that trend. Our horizon of investment is 5-6 years, and by the fourth (year), we start thinking about exits. We see key exits in strategic and Initial Public Offerings (IPO).

On your next fund, what would the corpus be? While your maiden fund was backed only by JSW Group, are you looking for investments from outside the group?

We haven’t finalised the corpus process yet. By the end of this calendar year, we will have a strong thesis on our approach and size, and at that point, we will also have a view on how much the family is ready to sponsor. The last quarter is when we will start the process. In our current fund, our investments were mostly Series A, and we will like to invest more capital in Series A. We will exactly replicate what we are doing, but with larger amounts of cheques.

This financial year has been extremely good for IPOs. For the VC firms, did this result in a windfall in terms of exits?

The companies that went public were mainly private-equity-funded and not venture-funded, with profitability track funded from the 2011, 2010 and 2012 vintage. It has taken 5-6 years for PE-funded companies to come to an exit. From the venture side of the business, profitability becomes a key matrix for IPOs, so it’s no more scale — its scale and profitability. Some strategic investors want profitable companies, so they want growing companies. But if you want to hit IPO markets, you need to combine both.

Last calendar year (2017) has been one of the best years for M&As too…

On the large side, M&As are fuelled by lower cost of capital; the cost of debt is also low in the global M&A context. It has been the best year in the US as the cost of capital is lower. Equity markets are rising, so cost of equity is low and there is enough liquidity in the system. So cost of debt is low — that doesn’t impact that side of the business so much until larger players such as Amazon, Apple, Facebook, which have access to both public and debt markets, become acquirers.

The Indian ecosystem is today active on exits by our domestic players that have adequate capital. With the amount of capital that sits with Flipkart, Ola and Paytm, you will see the domestic venture ecosystem becoming acquisitive over the next two years .

Related Topics
comment COMMENT NOW