BII plans to partner with existing top VCs and entrepreneurs to make selective Series A investments – both as lead or follow-on investments and make 3-4 such deals annually.
Bertelsmann India Investments (BII) — the investment division of Bertelsmann — has raised $500 million to make new and follow-on investments in India over the coming years.
With the new corpus, while the venture capital (VC) firm will continue to primarily invest in mid-stage companies — startups that are spread across Series B and Series D — it also plans on funding even select Series A new-age companies, something it had not done so far.
“A bulk of the fresh $500 million, say 80-85%, will be used to invest in companies which are in the mid-stage as that continues to be our major focus. But we plan to increase our coverage to now invest in select Series A stage companies as well. So, the remaining 20-25% of the entire amount will be reserved for those companies,” managing director Pankaj Makkar said in an interview.
Further, BII said it plans to focus its investments in sectors such as technology, software, tech-enabled health tech, future of work, fintech, agrotech. The fund will also be keeping an eye on disruptive technologies like web3 and deeptech with plans to open more offices in India and the region.
Asked how BII would identify companies for this pool, Makkar said, “We want to invest in companies that solve problems in a highly unorganised market using technology.” Further, “We’ll invest about anywhere between $5 million and $20 million at first. Over the years as companies do well, we can even increase our investment size to about $40 million in a single company — across different stages,” Makkar added.
Since its launch in 2013, BII said it backs over 17 companies, including a few unicorns like Eruditus and Licious. Shiprocket, Pepperfry, AgroStar, Lendingkart are a few of its other portfolio companies. The VC firm claims to have totally invested about $285 million in Indian startups so far.
Asked why BII had finally decided to fund Series A companies, Makkar said these companies have more room to grow, disrupt and are building businesses for the macroeconomic conditions that will play out in the longer term. BII has recognised the potential in the Indian startup ecosystem and has hence decided to invest in select companies which are in the Series A stage, which have shown more resilience than their late-stage peers where valuations have corrected by 30-40% as the tech stocks continue to underperform and capital has been difficult to come by, Makkar said.
“Series A companies have recently begun to grow and we make our investment decisions based on a longer timeframe, say over seven to 10 years. We at BII will be very cautious with our investments; we don’t want to spray and pray with large investments. We don’t want to be happy about making an investment, we want to be happy after our investments make money for us,” he concluded.
From the fresh pool, BII said it will make six to eight new investments a year.
