On Thursday, the 10-year partnership between Rishi Navani and Avnish Bajaj, founders of Mumbai-based venture capital firm Matrix Partners India, formally came to an end. Navani has moved out of Matrix’s digs at the plush Ceejay House office complex in mid-town Mumbai. He’s taking up residence just a few minutes down the road at the Four Seasons hotel where his new investment firm, christened Epiq Capital, gets down to work in a few weeks. Bajaj remains on board to steer Matrix through the next decade of venture capital investing in India, which already promises to be more exciting and challenging than the last.

The partnership split is sans any visible acrimony and controversy that has accompanied similar events at other venture capital firms in the past. Not surprising given that the two former partners, both extremely shy of media attention, have quietly run one of the most stable venture capital partnerships in the Indian market.

Navani and Bajaj became acquainted in rather ordinary circumstances. They met in the summer of 2005 on the sidelines of a conference organized by Stanford University at an uptown Mumbai hotel. That summer though was far from ordinary. India’s venture capital market was beginning to recover from the debilitating 2000-2001 dotcom bust. Bajaj, one of the speakers at the conference, had played an important role in the recovery. He had survived the nuclear winter that followed the bust and sold his online auctions marketplace Baazee to eBay Inc., the iconic San Jose, California based e-commerce marketplace, for $50 million, a modest sum by present-day standards.

When Bajaj and Navani exchanged visiting cards at the conference neither knew they’d soon embark on a 10-year partnership and, in the process play pivotal roles in shaping the venture capital industry in India. What they did know was that events such as the eBay-Baazee deal, one of less than a handful of dotcoms from India to deliver profits to its investors, had rekindled Silicon Valley’s interest in this market. A dozen-odd front-line venture capital firms from the Valley were already scouting the market. Matrix, an early investor in Apple Inc., was one of them.

Like several of its peers, Matrix initially leaned towards a soft launch in India through a satellite office. When they reached out to local fund managers for feedback, Navani, a managing director with Bengaluru-based WestBridge Capital Partners at the time, convinced them that the Indian market needed a deeper commitment. In August 2006, exactly a year after they had met, Navani and Bajaj teamed up to launch Matrix Partners India with a $150 million debut fund. Over the decade, the two would grow the funds managed by the firm to $600 million and build a portfolio of more than 30 companies.

Navani’s transition from Matrix couldn’t have been better timed. Both for the firm and its two founders.

Several things have changed in India’s venture capital market over the last decade and particularly in the last couple of years. When Matrix started up in 2006, the market wasn’t ready for pure play technology venture capital investors. The domestic consumer Internet market was still shallow and mobility was barely on the radar. Like most others, the firm decided to start with investing across stages and sectors. By early 2013, however, the consumer Internet market, particularly e-commerce, had exploded. The firm decided to pivot and became a technology investor focused more and more on early-stage start-ups. Some of its notable deals following the pivot include point-of-sales solutions provider Mswipe, value stays aggregator Stayzilla and taxi aggregator Ola.

While Navani and Bajaj led the pivot, it received critical support on the ground from the firm’s second line of fund managers, notably managing directors Tarun Davda and Vikram Vaidyanathan. Navani’s exit frees up headroom in terms of the scope of each of their responsibilities and importantly, compensation. They now stand to earn a greater share of the profits accrued from successive funds raised by Matrix. This has been a bone of contention with second-line fund managers at other venture capital firms that have recently had partners quit.

Incidentally, Navani’s exit also coincides with Matrix increasing the corpus of its $300 million second fund, which was launched in 2011. After the top-up, the corpus stands at about $400 million. There are already murmurs that the top-up actually signals the firm’s failure to raise a third fund. The murmurs aren’t unwarranted given that India’s start-up funding market is currently in the midst of a valuation correction. However, we have it on good authority that the firm was well placed to raise a new fund but took a conscious call to wait till next year. For now it wants to focus on exiting some of the investments from its current portfolio and improve its track record on returning profits to its investors.

A smaller corpus at this juncture probably makes sense given the firm’s preference for early-stage technology deals, where ticket sizes are significantly smaller and valuations more reasonable. A larger corpus brings with it the pressure to deploy more money within the limited lifecycle of the fund.

Navani, in moving on, also makes way for Bajaj to play to the core of what he enjoys doing most—work with very young start-ups and their founders. Navani has always leaned towards later-stage investing, though that hasn’t kept him from leading a sizable portion of Matrix’s early stage deals. While it will be interesting to see how Bajaj remakes Matrix Partners India, it will be equally stimulating to see how Navani navigates the private equity arena with Epiq Capital.

Snigdha Sengupta is a freelance journalist based in Mumbai and founder of StartupCentral. She writes on private equity and venture capital for Mint.

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