Falcon Edge Capital in talks for $250 million fund focused on India

American hedge fund Falcon Edge Capital, best known in India for investing in Ola and Dailyhunt among others, is in talks to raise a debut India-focused fund of $250 million, said two people aware of the matter, requesting anonymity.

New York-based Falcon Edge currently has more than $2 billion in assets under management and has made technology as well as non-tech consumer investments. Its global portfolio includes Alibaba’s financial services firm Ant Financial, Chinese ride-hailing firm Didi Chuxing and German food delivery firm Delivery Hero.

Falcon Edge has already raised $45.7 million for the India-focused fund, according to filings with the US Securities and Exchange Commission, the US markets regulator.

Navroz Udwadia, a co-founder of Falcon Edge, declined to respond to queries from Mint.

Founded by Udwadia and Rick Gerson in 2012, Falcon Edge began its investment journey in India in 2014 with real estate startup Housing.com along with Japan’s SoftBank in a $90 million round.

Since then, Falcon Edge has primarily invested along with or after VC firm Matrix Partners, which is currently deploying its third fund of $300 million. Their common portfolio companies include cab-hailing firm Ola, classifieds portal Quikr, payments firm MSwipe, social commerce startup Dealshare, student housing firm Stanza Living, news and content aggregator Dailyhunt, lender OfBusiness and Credit Vidya.

However, it has also branched out and sought proprietary deals recently, with investments in small-business accounting startup Khatabook, Locus-a software solution for the logistics space, and two-wheeler rental startup Bounce.

“A large India-dedicated fund indicates that Falcon Edge can now be a source of long-term capital and not ‘fly-in-fly-out’ investors as hedge funds are generally perceived as,” said a person who has worked on deals with Falcon Edge.

As a hedge fund, Falcon Edge is also one of the few startup investors with a wide flexibility of cheque sizes—from a million to hundreds of millions of dollars. “We think we are different across a few vectors—our capital, while long term and focused on specific spaces that we map out rigorously, is entirely flexible, and can be deployed from seed stage to pre-IPO stage,” co-founder Udwadia told the Times of India in April 2019 year.

To this effect, Falcon Edge has also backed older and more mature Indian businesses such as the National Stock Exchange and Domino’s Pizza.

Investors such as Falcon Edge and Steadview Capital- also a hedge fund- are doubling down on India after tasting some success and seeing high exit multiples in a short period of time.

Mint reported on July 17 last year that Steadview—whose Indian startup portfolio includes Flipkart, Ola, Lenskart and Dream11—plans to invest $500 million in growth-stage companies in India over the next two years.

Importantly, Falcon Edge’s debut India fund also comes at a time when large-size venture capital deals are expected to see a slowdown in 2020, post WeWork’s listing debacle and Uber and Lyft poorly performing after listing.

However, early and growth-stage investing still remains strong, with existing and new investors deploying more capital than ever.