Mumbai: Matrix Partners India, the Mumbai-based venture capital firm backed by Boston-headquartered Matrix Partners, has tripled its corpus for investment in India from $150 million (Rs589.5 crore) to $450 million. The additional capital will power the firm’s bid to broaden its strategy from only early stage investments to growth investments.
This is a departure from the firm’s traditional investment strategy in the US market, where it is exclusively focused on early stage venture investing. Subsequently, the cap on deal sizes in India will increase from $10 million to $30 million per deal—also a first for Matrix. “We see significant opportunity in this stage of growth capital, especially since other funds that operated in this range have scaled up,” says Rishi Navani, co-founder and managing director, Matrix Partners India.
The firm will continue to invest in early stage companies, but about half the number of deals will be in growth companies. Navani and Avnish Bajaj co-founded Matrix Partners India in August last year and raised the initial $150 million fund. At the time, the focus was on early-stage investments in consumer facing businesses, notably, consumer Internet and mobile, retail, hospitality, media and travel, among others.
Partners in growth: Rishi Navani (left) and Avnish Bajaj, co-founders of Matrix Partners India.
The growth investments will also focus on consumer services, but less so on consumer Internet and mobile companies. Such investments will continue as early stage deals. With the expanded India corpus, 15% of Matrix Partners’ global funds under management, currently at $3 billion, is now in India, which is the only country fund outside the US. Matrix also runs a hedge fund globally, which has invested here in the past.
For its growth investments here, the firm will look at small and medium enterprises generating revenue ranging between $10 million and $20 million, as well as “greenfield ventures” that require large capital investments. These could typically be business divisions spun off from large corporations, foreign multinationals looking to enter the Indian market, or start-ups by entrepreneurs with significant experience in the field. “Increasingly, people at senior management levels here are quitting jobs at multinationals to start their own ventures. We are looking to back people with impeccable credentials,” says Avnish Bajaj, co-founder and managing director, Matrix Partners India.
The firm has committed close to 40% of its initial $150 million across five companies—Bangalore-based local search company Four Interactive Pvt. Ltd, the Essel Group-backed prepaid cash card company ItzCash, Delhi-based Moods Hospitality Pvt. Ltd, which owns the Yo! China brand of Chinese food restaurants, online DVD rental start-up Seventymm Services Pvt. Ltd, and Digital Music India Pvt. Ltd (in-store advertising services branded as vJive).