Former Reliance Jio executive raises $130 mn to back mid-market startups

Including the green shoe option, the investment firm, which Choudhury founded, could raise another $120 million from established global investors from Europe, the US, Middle East, and India.

Choudhury, who spent about five years at Reliance Jio, was a part of the Indian conglomerate’s leadership team until 2022. He led several verticals including e-commerce, telecom, media and fintech during his tenure. Prior to this, he served as chief executive and managing director at Aimia India, one of the largest data-driven marketing companies.

Playbook Partners is curated by other operating partners including Manish Choksi (Asian Paints), Aakash Chaudhry (Aakash Education) and Milan Sheth (Ex-Automation Anywhere) who have also run businesses and grown them.

Choudhury brings nearly 2 decades of investing experience across early and late-stage startups in personal as well as an institutionalized capacity. He also runs his family office – Pivot Ventures – through which he has invested in companies including Curefoods, Exotel and Khatabook. His portfolio includes other unicorns and exits such as InMobi, Myntra, Fractal, Nazara, Policybazaar and Rapido.

Investment strategy

Playbook’s fund will invest in growth-stage, tech-enabled businesses in large addressable markets that have meaningful scale, healthy operating margins, and high growth. With an average ticket size of $10-20 million, the fund will roughly constitute about 15-20 investments across various sectors including health-tech, SaaS, fintech, ecommerce and supply chain.

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The fund will have a mix of primary and secondary investments and will target stages between series B to D. “We are already looking at 4-5 companies very actively and are in advanced discussions," Choudhury said without disclosing any names.

Growth capital is a type of private equity instrument that takes a minority stake in mid-market or relatively mature companies to help them expand their business operations. This investment instrument aims to fill the white space between private equity and venture capital and typically targets companies that are already profitable.

In an interview with Mint, Choudhury highlighted that Playbook’s fund will typically target those companies that, on an average, clock ₹100-200 crore in revenue with a definite product-market fit and a demonstrated ability to grow with sustainable unit economics. He also stressed the importance of identifying visionary founders with an ability to create meaningful outcomes in large addressable markets, especially in instances when investors enter at an early stage. “India is ultimately a play on volume. The key is to see if a company can deliver affordable products to customers at scale," Choudhury said.

As far as opportunities in the growth stages are concerned, “there are enough if priced correctly," he added. The markets have undergone deep correction over the last two years as companies grow to the valuation they sought during peak funding and are actively looking to reduce burn and grow in a more sustainable manner.

Playbook’s sector-agnostic thesis is based on the premise that tech-enabled businesses have a greater tendency to scale capital more efficiently. Under the larger umbrella of digital transformation, there are various aspects of a business across its entire value chain, Choudhury explained. “If it is at the front-end, there is commerce, or whether it is at the middle, then there is fintech and if you go further backwards, there’s supply chain. Using all these larger themes at play, one can effectively build solutions or products which will create value for both companies and in terms of investable opportunities."

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Further, India’s growing youth population and tech talent lay the foundation for immense disruption and innovation, he said. Historically, technology has been a large value creator for economies and businesses worldwide. “India is still at its infancy stage and has a lot of scope to grow from here and global investors are also acknowledging this," Choudhury said. These factors have positioned the country as one of the fastest growing powerhouses in the world today, he said. “The tides are turning now... we are increasingly seeing that global investors are no longer treating India as an emerging economy."

IPO and secondary markets activities

Investors are also encouraged by the boom in IPO and secondary markets activities, which is further fuelling growth sentiments in the country, he added. This can be seen with several new-age startups including Nykaa, Mamaearth, FirstCry, Zomato, Delhivery, Unicommerce and Ola Electric that have gone public in recent times. Other IPO-bound companies, including Lenskart, Ofbusiness, and Swiggy, are also expected to tap the public markets in the near term.

As far as secondary transactions are concerned, there have been numerous instances in recent times. In June, Singapore's state-owned investment firm Temasek and Fidelity Management & Research Company purchased Lenskart shares worth $200 million in a purely secondary transaction.

Year 2023 was remarkable for India as exit value soared by about 15% to $29 billion, accompanied by a rise in exit volume from about 210 to nearly 340 exits, Bain & Company said in its private equity report released earlier this year. India, which is playing an increasingly significant role in Asia-Pacific PE-VC (private equity-venture capital) activity, accounted for about 20% of all PE-VC investments in 2023, up from around 15% in 2018. The report added that this has led to a rise in capital from both domestic and global/regional funds that are now diversifying across various sectors and asset classes within India.

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