While overall investor interest may be undergoing a cool down, some firms still have no qualms in pumping funds into startups. Sweden-based Investment firm AB Kinnevik, for one, is reportedly considering an expansion of its investments in India by three to four times over the next four year period.
The company wields a significant fund that is in excess of $6 Billion, and is considering almost quadrupling its commitments into India — up to 10 percent of its corpus, from the 2-3 percent invested at present.
Yup, and this despite the fact that its previous investments into the country have failed to generate much returns.
The firms’s portfolio includes — Jabong (Jade eServices Pvt. Ltd), Quikr (Quikr India Pvt. Ltd) — and included — FoodPanda — some notable names, in partnership with other VC firms.
The company is also indirectly behind some other startups. For example, it is the largest investor in German VC firm Rocket Internet, which in turn is the driving force behind several companies, including the online furniture store Fabfurnish (Alix Retail Pvt. Ltd).
Although the last we heard, Rocket Internet was desperately looking for a partner, failing which it may have to shut down Fabfurnish — meaning that things are not going anywhere as well as expected, quite the reverse actually.
Speaking on Fabfurnish, Kinnevik CEO Lorenzu Grabau said,
One of the things that I wanted to mention which applies to Fabfurnish and many of the other companies, we believe that there are different roles to value creation. When our companies are not doing very well or if the market is too competitive we look for ways to combine businesses and that’s helpful because it reduces competition and it makes for stronger businesses and it’s the right thing to do for employees who, as opposed to having start all over again, can migrate to be part of another organization.
In the case of Fabfurnish, we are exploring options to make the company stronger.
Although, I find myself in the dark — pitch dark in fact — as to how shutting down a company will tend to make it stronger. However, he might be referring to his company’s attempts to find a partner for its Fabfurnish commitments.
In fact, the company is also looking for partners for its interests in Jabong, citing expansion as the need of the hour to counter the purchase lost by the company to its rivals, recently.
Jabong has a great opportunity and given the size of the Indian market we might need partners to make it stronger. We suspect over the next two or three years we will continue to raise capital at Jabong and at our other e-commerce companies so that we have other sustainable franchise,
Interestingly enough, the firm is playing host to a new phenomenon where its migrating capital across countries, while ensuring that it stays committed to the same niche. Just last December, it sold off its entire holding in Russian online classifieds platform Avito for $846 million and it will supposedly use that — or some of that at least — same fund to support Indian classifieds platform, Quickr.
Why this sudden interest in India though? Grabau puts it down to a scarcity of capital in the market, a situation that provides ample opportunities for consolidation — the investors dream, in short.
Consolidation allows firms to acquire tottering businesses — often with infrastructure and all –and integrate them with their own services, in effect giving them a much needed boost.
Well, investments are great for the economy — where ever they come from. Go Kinnevik!