Reading the tech trends accurately

Our investment thesis is predicated on the rapid growth of the Indian economy during the 2020s and 2030s. As in other large economies, this growth will largely be driven by the technology industry, which will benefit disproportionately from it. We expect upwards of $1 trillion of value created by the tech industry in India over the next decade... a substantial portion will go to new tech start-ups in India. We want to provide investors with a slice of this pie.

Stellaris is a technology-focused fund across sectors. One of our key investment themes is the digitisation of Indian small businesses. It will create success stories in, say, fintech as well as B2B commerce. Similarly, artificial intelligence will transform industries as diverse as media and entertainment and IT services. Our focus is on getting these broad trends right in terms of direction and timing, and finding specific market opportunities.

We raised our Fund 2 of $225 million in 2021, and have built roughly 60 per cent of the target portfolio.

We intend to support portfolio companies over multiple rounds of funding; three subsequent rounds for high-performing companies.

Stellaris is an early-stage fund. We typically invest $1-3 million in seed rounds, and $4-6 million in series A rounds. Occasionally we enter at a business plan stage when we have extraordinary conviction in the founders or the investment thesis.

We are very happy to hold our positions in the best portfolio companies till they go public or find strategic acquisition opportunities. Very few companies in a venture portfolio achieve that level of success, and prematurely selling our stake will depress the returns.

Our strategy is not dependent on market cycles. We did eight investments in FY21-22 and nine in FY22-23, when market conditions were different. We expect a similar number in the current financial year as well.

Our investment pace is governed by what we think of as an ‘SIP approach to start-up investing’. By deploying capital at a regular cadence across market cycles, we are forced to raise our bar when everything is looking attractive (as it did in 2021); in down-cycles like in 2022-23, this strategy allows us to take risks and access good opportunities when everyone else is fearful.

We believe there is sufficient capital for good companies in the Series A and B stages. For Series C and later funding rounds, we have advised our portfolio companies to expect delays in fundraising and plan their cash flows accordingly.