Bertelsmann India Investments (BII), a sector-agnostic venture capital fund, plans to invest $500 million in 3-4 years, according to Pankaj Makkar, Managing Director.
BII aims to invest in smaller companies that can take on the giants. Makkar tells businessline that the firm is bullish on health tech, fintech, edtech and software-as-a-service (SaaS). Edited excerpts from the interview:
What is your investment strategy?
We maintain a steadfast strategy by executing 5-6 deals annually, with a primary focus on Series A and Series B-C investments. The Series A investments typically involve $3-5 million as the first cheque, while it’s $5-20 million in the case of Series B-C investments.
What do you look for in a start-up before investing?
We look for start-ups with strong customer appeal, proprietary ingredients, robust R&D, and unique difficult-to-duplicate products that deliver customer delight. The commitment involves 3-5 investments every year, aligning with innovative ventures that adhere to BII’s investment principles.
Which are the sectors with growth potential in the Indian market?
We remain bullish on health tech, fintech, edtech and SaaS due to significant business opportunities and the disruptive companies in these sectors. We will invest $500 million over the next 3-4 years. We look at large business opportunities, companies that are disrupting sectors and have significant amount of profit pools to build large, sustainable businesses. We get excited about companies that have the potential to be sectoral leaders (anchor assets). The new investments will likely be in smaller companies that could disrupt these big ones. This means we’ll need more innovation to succeed. Given that a massive amount of wealth has been created in India, most investors are keen on the Indian digital start-up story.
What is the profile of your current portfolio?
We focus on early growth-stage investments (Series A to D) in tech-driven start-ups. BII is a sector-agnostic venture capital fund; in the past decade, we have invested $300 million in category-defining companies, including Eruditus, Licious, Shiprocket, Pepperfry, AgroStar, Lets Transport, Lendingkart, and Rupeek.
What is your exit strategy?
We are not actively seeking exits. The long-term capital approach allows for swift reinforcement of successful ventures in the portfolio. As portfolio companies evolve into anchor assets, BII anticipates substantial value generation and returns for all stakeholders. In 2021, BII sold a part of its stake in Eruditus.
How is the current start-up funding environment?
It is dynamic, with a continuous influx of capital into promising ventures... the availability of funds signals enduring confidence in innovative businesses.