Why Microsoft’s Swiftkey is in Transit Capital’s anti-portfolio

In Swiftkey’s case, Transit Capital walked away with a better understanding of the sector and conviction about its investment strategy, says managing director Kumar Shah.

Transit Capital is a cross-border investment firm that spun out of Micromax’s Corporate Venture Capital programme. Our strategy has always been to back business models that can work across multiple geographies. While we have a fair list of companies in our anti-portfolio, the one where we built great relationships, had great conviction and didn’t get to the finish line (missing a great outcome) was smart keyboard startup Swiftkey.

After completing investments in travel, e-commerce and health verticals, we started looking at the keyboard and browser, two areas where users spend significant time. Our team members have always been big fans of Swiftkey and we found its prediction models, product capabilities and user engagement were far ahead of the competition.

We met one of Swiftkey’s co-founders at the Mobile World Congress and over the course of the year got to know the stellar team they had built. Swiftkey was growing at a rapid pace around the world, had a growing user base in India and the management team was looking to strengthen their presence in one of the largest internet markets. When the opportunity to potentially invest came up in their next round, we had the conviction to move quickly but for various reasons could not execute the transaction.

Shortly after the round closed, Microsoft announced it was acquiring Swiftkey. We missed the opportunity to work with a great team and would have had a quick and stellar outcome as our investment thesis played out in the months after. Every company in the anti-portfolio improves some part of our investment process. In Swiftkey’s case, we walked away with a better understanding of the sector and conviction about our investment strategy. Importantly, this also showed us a gap in the market to build a cross-border firm, which led to the formation of Transit Capital.