IDFC Alternatives partners with Parampara Capital to start early-stage fund

Mumbai: IDFC Alternatives, the asset management arm of infrastructure-focused lender IDFC Ltd, has teamed up with venture capital firm Parampara Capital to start an early-stage investment fund, the company said in a statement.

IDFC Parampara Early Stage Opportunities Fund Series I plans to raise around Rs100 crore by March 2017 and will seek to make series-A investments in companies across sectors where technology, intellectual property and innovation are the primary differentiators, IDFC said.

The fund will make a total of around 10-12 transactions with a ticket size of about $1 million. Deployment of the fund is expected in the next 24-30 months.

Parampara Capital is the investment manager to the fund. IDFC Alternatives will have a strategic commitment to the vehicle, including participation in the funds investment committee and advisory board.

“This is another milestone for our business that has been expanding its footprint steadily. We continue to be excited about backing Indian entrepreneurs and our partnership with Parampara allows us to back entrepreneurs at an early stage,” said M.K. Sinha, managing partner and chief executive of IDFC Alternatives.

India’s early-stage investors struck 405 deals worth $1.4 billion in 2016. The overall volume and value of investments fell by 21% and 28%, respectively, from the previous year, according to Chennai-based researcher Venture Intelligence.

IDFC Alternatives operates under three verticals—private equity, a domestic real estate fund and two infrastructure equity funds. It has now added early stage investing as its fourth asset class as it sees a large opportunity in this space. In addition to the existing three asset classes, the firm is planning to scale up the early stage investing portfolio over the next few years.

“Their financial services expertise in India and particularly their private equity investment experience will add a lot of value and help IDFC-Parampara fund to become a leading technology early stage capital fund in India,” said Venkat Vallabhaneni, general partner at Parampara Capital.

IDFC’s first private equity fund was launched in 2002. The two infrastructure funds have assets under management aggregating $1.8 billion.

Jatin Desai, general partner at Paramapara Capital said, “IDFC partnership will help the fund in identifying FinTech opportunities in India for investments and also extend IDFC’s domestic and global investor base interested in investing in the technology early stage capital space in India which has tremendous potential going forward.”

IDFC-Parampara Early Stage Opportunities Fund was launched in August 2015 by Venkat Vallabhaneni, Jatin Desai and Sridhar Rampalli. The fund has offices in Mumbai and Hyderabad.

Several new funds are betting on the early-stage consumer Internet/technology ecosystem in India. Some of them, such as Unicorn India Ventures, Pravega Ventures, Stellaris Venture Partners, WaterBridge Ventures, Endiya Partners and Parampara Capital.