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Chiratae Ventures, formerly IDG Ventures, one of India’s oldest venture capital (VC) investors, was launched in 2006. It was an early backer to Flipkart and Myntra. Recently, the VC firm closed its Fund IV worth $337 million (about 2,502 crore). Since its inception, it has exited 38 of the 100 startups it had invested in. With $950 million in assets under management, it has witnessed two portfolio companies going public and now awaits a third listing through PolicyBazaar. In an interview, Chiratae chairman and founder Sudhir Sethi shares the firm’s strategy to take on global peers, expansion plans and the investment landscape in India. Edited excerpts:

In the current funding landscape, how did your investment thesis evolve?

At Chiratae, we believe that business has to significantly contribute to society, not in a philanthropic way, but by solving real challenges which the society has faced. This is what we are seeing in the 100-odd companies we invested in so far. If solving business challenges is a criteria, I would say 80 of our portfolio companies have done just that. India has seen capital worth $200 billion being poured in the last 6-7 years. We believe another $500 billion will come in the next seven years. We have exited 38 of our 100 investments. The balance has a revenue of around $1.2 billion, and a combined market capitalization of upwards of $12 billion, which is 0.4% of India’s GDP. So, we feel we are making an impact.

With startups looking to go global, will Chiratae also aspire to enter overseas markets?

We will have a presence in the US in the near future. However, we will continue to back Indian entrepreneurs. Today, 95% of follow-on capital comes globally and more than 90% of exits are still from outside India, which means an Indian VC firm also has to build presence globally. Of course, hopefully, exit ratios will change as more companies gun for public markets.

Global launches for our portfolio companies happened during the covid months. Hence, Chiratae’s way of growing its portfolio companies globally is going to be extremely important.

Considering the frenzy and agility at which global funds are backing Indian startups, where does an Indian VC like you stand?

We are here for the long term. There will be frenzy, there will be troughs. Our second fund ($95 million) was smaller than the first ($150 million). We learnt our lesson from that.There is not a single VC with a cumulative AUM of about $1 billion. We want to make that to $2-4 billion in the years to come. That doesn’t happen through frenzy. Indian capital is taking more risks than global funds (capital) today, and very different risks.

Chiratae has launched the Sonic programme. Why hasn’t it launched an early-stage startup programme like other VCs?

By design, we are going for a unified strategy of execution across seed to Series B and above. Of course, the agility which the seed team is showing is much different from our late-stage Series B teams. But the culture of speed, agility, governance and impact flows through all our teams, and business categories remain.

Considering the investment opportunities, will Chiratae consider raising another fund?

Startups are growing faster, they will need more capital, and we will be there to help them scale. It has taken us 15 years to raise $1 billion and we will do the next billion in half the time. In fact, VCs have to be ahead of the entrepreneurial ecosystem, and need to anticipate how much to invest a year from now. Last year, almost 42 of our firms grew faster than pre-covid levels—economics became healthier, many advanced profitability and product plans were preponed—nobody knew this would happen.

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