Indian venture capital giant Avendus confirmed on Wednesday that it plans to raise up to $350 million for a new private equity fund.
The new fund, called Future Leaders Fund III, will enable the Mumbai-based firm to raise larger capital and maintain a key position in the startups it backs, Ritesh Chandra, managing partner at the firm, said in an interview with TechCrunch. TechCrunch reported in early April that Avendus was planning to raise a new fund.
Avendus has established itself as India's largest venture advisor to startups and has been a fixture in most of the country's growth-stage deals. It served on over 30 transactions, including mergers and acquisitions, last year, according to private market insights platform Venture Intelligence. The expansion of its private equity arm underscores the company's ambition to ingrain its tentacles deeper into the ecosystem and further increase its stake in the returns.
The company's growing profile can be attributed to the fact that many of its established global rivals, such as Goldman Sachs, Morgan Stanley and JP Morgan, initially paid little attention to the Indian market, allowing Avendus to gain a foothold and build relationships with the country's burgeoning technology entrepreneurs.
The relationships have helped the firm’s private equity arm access some of the highest-profile deals. Financial-services startups Jaspay and Zeta, for example, have only Avendus on their cap table, outside of SoftBank, their main backer. “These are businesses that came out of our relationships and our network,” Chandra said.
Avendus' Private Equity arm has a reputation for delivering timely and significant exits for investors with a portfolio that includes Delhivery, Lenskart, Licious, Vercy Innovations, ExpressBeeds and National Stock Exchange. For example, Lenskart and National Stock Exchange both delivered four times the amount invested by Avendus within four years of investment.
“The life cycle of our fund is five to six years. The problem in the Indian startup ecosystem is that investors put in a lot of capital but do not get much return over a long period of time. Our focus is on how to recover their capital,” he said.
IPOs for tech startups, a rare phenomenon just four years ago, are on the rise in India, but investors can't rely on IPOs alone for returns. Avendus has established relationships with later-stage investors, including government investors, that allow it to exit positions by selling shares, offering an alternative avenue for generating returns outside of an IPO, Chandra said.