, a Silicon Valley-based venture capital firm with multiple investments in India, is bullish about its prospects in the region and on finding qualitative start-ups for its investments. It is currently deploying its $100-million second fund for its investments, besides beginning to dip into its $125-million third fund. 

NoBroker, Khatabook, Moglix, Apna, Teachmint and Agnikul are some of its notable investments in India. 

Madhu Shalini Iyer, Managing Partner of the VC firm, spoke with businessline on the fund’s investment strategy, the funding environment, and valuation corrections. 

Edited excerpts from the interview:


What is your investment thesis?

We are a data-driven fund; we find companies through algorithms and underlying data. Our database has over 50 million companies, out of which we surface 150-200 companies and do an outbound. India represents 20-30 per cent of the pipeline, and this proportion has reduced now. If earlier we saw 50 per cent of the companies from the pool, we now see 35-40 per cent. However, the quality of start-ups is better now.


Interesting sectors, cheque size, and exit route?

We are seeing opportunities in start-ups across the segments of D2C [direct-to-customer], B2B [business-to-business], B2C [business-to-customer], deep-tech, fintech, space-tech, and climate, among others .Our cheque size is in the range of $1-6 million. We do seed and Series B investments, and our preferred entry level is Series A. Ideally, IPO [initial public offer] is the exit route we prefer, while acquisitions are also favoured. We have made one exit through the acquisition route and are waiting for IPOs in some of the start-ups from our second fund investments.


Have valuation corrections bottomed out, and can this boost investment momentum?

In India, the valuations are highly palatable now, while in the US the valuation in some sectors remains high. But I don’t think the fund worries about valuations, and we do not try to nickel-and-dime founders on valuation. Valuations honestly don’t matter if a company has a great idea that can go a long way and has a good execution model. 


Some of the start-ups you’ve invested in have made layoffs. How do you see their trajectory?

The advice for founders is to focus on pursuing a good idea with a strong foundation, rather than worrying too much about macroeconomics. It’s essential not to hold back on growth or conserve cash during challenging times, but instead build the business according to market demands, with clever adaptation and awareness of the economic climate.  Limping along conservatively can hinder success, so the emphasis is on building to win, playing to one’s strengths, and not being overly fearful of macroeconomic conditions.