For Nexus Venture Partners, one of India's most prolific venture capital (VC) firms, that has backed unicorns such as Druva, Delhivery, and Zomato, the thesis of staying invested for long in young start-ups has paid off well.
To be sure, the VC firm invested early in Druva (Series B), Delhivery (Series A), and in soonicorns Postman (seed, Series A), Unacademy (Series A) and H20 (seed, Series A). Soonicorns are companies that could cross the $1 billion valuation mark soon. The Silicon Valley- and India-based VC firm owns a stake in Zomato as the latter acquired food delivery startup Roadrunnr, a company where Nexus Venture Partners led Seed and Series A funding.
“Nexus Venture Partners has the highest number of unicorns as a percentage of our portfolio," said Naren Gupta, co-founder and managing director of the firm, in a recent interview to Mint in Bengaluru. The firm has invested over $100 million in the above mentioned five firms, whose combined value is close to $4.5-5 billion, he said. "Obviously there is also Snapdeal that has been growing profitably," he added.
The firm prefers to invest $500,000 to $10 million in early-growth stage companies and also participates in follow-on investments at later stages. So far, it has invested nearly $1 billion in over 100 companies. A major portion of the money has been invested in India, he added.
"We are probably the only fund that has a product-first approach. The product defines the company. We have (backed) companies that had almost zero revenue for the first three years. The next year, they generated $3 million (in revenues); the following year, they did $10 million and then $30 million and then $100 million, and so on," said Gupta. "We take a very long-term view. We want every company to grow and go public."
Nexus Venture Partners closed its latest India fund at $350 million last year and has made eight investments from it so far, including bike taxi startup Rapido.
"Our previous early-stage fund was $310 million dollars. This fund is 10-15% larger. Our basic philosophy is not to have very large funds," Gupta said. "If you look at the best performing US funds, they are in the size range of $350-400 million. It is very hard to deploy too much capital in the early stage," he added.
Rapido, he said, has "grown about 10 times larger in size in the last nine months since we invested." In response to a question on Nexus VP-backed ShopClues that has not performed as expected, he said, "The company has been challenged for a while. It is looking at various options right now, in terms of what it should do next".
He added that their investments in the consumer space are focused on models that are viable long-term, while their technology investments focus on deep and emerging technologies. "We were among the first funds to invest in cloud and Artificial Intelligence (AI). We continue to invest heavily in AI, voice applications, security and customer and automotive technologies," he said.