BackOpic looking to invest in late-stage Indian start-ups
Opic currently has 40 projects in India with total investments valued at $1.5 billion across sectors such as power, banking and financial services
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Mumbai: The US government’s development finance institution Overseas Private Investment Corp. (Opic) is keen to back late-stage Indian start-ups, said a senior executive. “In VC (venture capital), we are looking at late-stage firms, that is Series B, C and D. What we have decided not to do is get into early-stage venture capital, and not take the technology risk," David Bohigian, executive vice-president at Opic, said in an interview.
Bohigian said venture capital is an important class for the ecosystem as it helps create entrepreneurs. “Entrepreneurs are the most engaged citizens. When you apply the entrepreneurial ecosystem to the world’s largest democracy, we think there is going to be a great ripple effect through the prosperity of all of India. Every year, Opic puts in more than $500 million into private equity and we will continue doing that."
Opic currently has a private equity portfolio of $3.5 billion, a business it has been in for decades, said Bohigian, adding that the development finance agency typically commits between $5 million and $25 million, or up to a quarter of a fund’s total capitalization.
“But what is more important to us than how much is Opic investing, is how much impact we’re having in the broader ecosystem, and how much money the funds are attracting from traditional partners."
Opic has a $23 billion portfolio across 90 countries, ranging from political risk insurance, project finance and private equity.
In India, it has around 40 projects with total investments valued at $1.5 billion across sectors such as power, banking and financial services, said Bohigian.
On the VC front, Opic has committed an investment in Iron Pillar, a mid-stage India-focused venture capital fund. On Friday, Mint reported that Iron Pillar had made a final close of $90 million for its debut fund.
“The multiplier effect of Opic’s investment into Iron Pillar which invests in start-ups is creating tens of thousands of entrepreneurs. We’re looking to make sure there is impact. That can happen in housing, tech, power and healthcare, and across every industry. And Iron Pillar has also invested in sectors that we think can make lives better for many Indians."
According to Bohigian, while management talent and a large market are available in India, the ecosystem has faced issues in terms of capital availability.
“There are three key elements to any successful business plan—money, markets and management. Clearly, to have the capital to scale a business is important, and that has been a missing element in the Indian venture capital markets. India’s entrepreneurs are among the most talented in the world and we think they will be able to overcome challenges across operations, marketing, technology," he said.
“We measure our ability to have impact more than the dollars invested. So, if there is a project where we can triple the amount of power, like we did in Togo, that would be a fantastic outcome from an investment standpoint, but more importantly, from an impact standpoint. In India, for example, if we can help the solar power industry to make India more energy independent. It’s less about the dollars and rupees and more about the impact," Bohigian added.
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