Private equity investments in Indian startups may be facing a slowdown at the moment as compared to last 2 years. However, investors are still very bullish on India. This is evident from the new funds which continue to come up this year. According to a fresh report in Livemint, PE firm Fulcrum Venture India is planning to raise a staggering $120 million (about 800 crores) for its third fund.
It will reportedly raise the amount from both domestic and foreign Limited Partners (LPs). However, more than half of the investment will come from the latter. At present, Fulcrum Venture is in talks with Securities and Exchange Board of India (SEBI) to register the new fund. The report cited two anonymous people familiar with the development.
They are planning to raise around 700-800 crore ($100-120 million). The fundraising plans are at an early stage and right now; they are in the process of tying up soft commitments from limited partners (LPs),
said one of the sources.
Fulcrum Venture India typically invests in pharmaceutical and healthcare segment. Krishna Ramanathan founded the firm in 2012. It had raised 100 crores for its first fund at that time. In 2013, it closed another round of about $9.7 million(60 crores) for the second investment fund.
The company made a number of investments in healthcare startups from its previous funds. These include pharmaceutical company Shield Healthcare, trichology chain Richfeel Health and Beauty, nutraceutical products company Nutri Synapzz Therepeutix, etc. It also invested in Congruent Solutions which is an IT solutions and BPO provider specializing in the pension industry.
Rise of PE funds in India
A recent report by Goldman Sachs revealed that private equity funding in Indian startups had declined in 2016. It witnessed a dip of 25% YoY(year-on-year), falling from $2.5 billion in 2015 to $1.9 billion in 2016.
However, the fall in funding seems more because of now cautious nature of investors who want to invest in startups with scope of growth and sustainable business. If one looks at the number of new funds which have raised capital this year, it clearly suggests that investors remain quite positive for India.
For instance, ICICI Venture, the private equity arm of ICICI Bank, raised around $190 million in the first phase of its fourth India Advantage Fund. Infuse Ventures focussed on renewable tech raised a massive $150 million under a new fund called Bharat. Another renowned investor 500 Startups launched a $25 million fund — 500 Kulfi.
Even individual investors have also launched their own funds this year. Healthcare veteran GSK Velu launched two funds worth $100 million and $75 million.
Similarly, Siddharth Parekh, the younger son of Deepak Parekh, chairman of Housing Development Finance Corp. Ltd (HDFC), launched his own $200 million private equity firm christened Paragon Partners.
And all the above funds have come up this year only suggesting that there is no dearth of capital for startups or one should say sensible startups.