Early-stage fund house 8i Ventures focuses on startups in the fintech and consumer space in India. From its first ₹97-crore fund, 8i made about 13 investments, of which seven proved winners. Four of these — Blue Tokai, EazeBuzz, M2P and Slice — seem to be on track for an initial public offering.
Vikram Chachra, Founding Partner, 8i Ventures discusses with businessline the firm’s investment thesis, digitisation initiatives across sectors, and why Series A is the optimum time for investment. Edited excerpts from the interview:
How much money have you raised to date?
The first fund has done well and was ranked amongst the top 10 VC funds in the world. We are on to our second fund, targeting $50 million. We hope to complete it by the end of the year. We are at the stage of approvals from some institutional investors.
What is the strength of your current portfolio?
We intend to invest in 25-30 companies, so there is a long way to go. We have invested in about five companies and expect to invest in at least 20 more over the next two years.
What is your investment thesis?
Broadly our thesis has been to invest around the ongoing digital adoption in India.
As the economy transforms from analogue to digital, we pick up threads in sectors that are digitising and invest in companies driving that adoption curve. We invested heavily in that area even from fund one.
The thesis is around digital enablement of money and commerce. We have also had some consumer brands, all with a strong digital presence. Digital adoption, be it digital commerce or digital payments, is common to their index.
Which sectors are you bullish on?
We are keen on fintech; commerce can be marketplaces or consumer brands. Increasingly, we are also looking at software built in India for India.
We are keeping a sharp eye on AI, where there is a hype cycle, but a lot of useful stuff is also being built.
We must determine what will work for our country.
What is your average cheque size?
If we have a winner, we will invest roughly 10 per cent of the fund in stages. Generally, we follow a model — ₹5 crore will be our seed cheque; ₹15 crore in the follow-on in Series A; and another ₹20 crore in Series B.
What kind of exit do you prefer?
We have seen multiple exits. Some were acqui-hires. The aim was to get a landing spot for our founders and ensure our capital was returned.
We received 60-100 per cent in those exits. Our first fund is almost five years old. With a successful fund, you can get exits at attractive values in about seven years.
Anything less than that is pure luck, particularly if you exit at a high value. Series A is usually about product-market fit. Series B is typically about building on the product-market fit, and helping the company strengthen its position.