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Anicut Capital specialises in equity investing in early-stage and growth startups, as well as providing structured credit to micro, small and medium enterprises (MSMEs). The multi-asset investment firm, established in 2015, identifies opportunities that banks often overlook due to regulatory constraints, says its co-founder and managing partner IAS Balamurugan.
Since banks primarily focus on safeguarding small depositors and deal with cash credit, working capital loans, and fixed asset financing, Anicut Capital attempts to fill the gaps in the structured credit business, he says. Edited excerpts from an interview:
What is your investment thesis?
We provide flexible funding to support entrepreneurs in growing their business. We are sector-agnostic, investing across consumer brands, fintech, B2B/SaaS [business-to-business or software as a service], and IT services; our criteria vary across investment strategies — seed, early growth, and private credit.
What is your average cheque size?
Our cheque size for debt financing is ₹100-125 crore. For angel investments, it goes up to ₹4 crore. Series A funding falls between ₹30 crore and ₹35 crore. For late-stage funding, it is ₹55-70 crore.
How many investments have you made so far?
We have invested in over 120 companies across our funds. Our portfolio companies include AgniKul Cosmos, Wow! Momo, Sugar Cosmetics, Milky Mist, Epigamia, Burgerama, Blue Tokai, Neemans, Lendingkart, BlueBinaries, Artium Academy, Bira, and Tao Digital.
How does your criteria vary across different stages of investing?
In the seed stage, we spend time understanding the founding team’s quality, past experiences, long-term vision, and ability to execute. We look at large and growing markets both in India and abroad, and at companies that have a unique proposition or intellectual property.
In the early-growth stage (Series A), we look at businesses with a proven and scalable model, product-market fit, sustained traction, and growth. We like businesses with high gross margins, sustainable cost structures, and a clear path to profitability.
In private credit, we look for demonstrated consistent growth and profitability through the years. We look at emerging market leaders and reputed promoters with integrity and market credibility. Importantly, we look for consistent cash flows and profitable models that have the opportunity for continued margin expansion and cash flow generation.
How many funds have you raised so far?
Anicut currently manages three debt funds, a seed fund, an early-growth equity fund, and a late-stage equity continuum fund with a cumulative AUM [assets under management] of ₹3,500 crore.
How many exits have you made so far, and what is your preferred mode of exit?
We have exited from 40 companies in private credit and five on the equity side.
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