Early-stage venture capital firm Stellaris Venture Partners — co-founded by Alok Goyal, Rahul Chowdhri, and Ritesh Banglani in 2016 — has invested in 37 start-ups across sectors. It has raised $315 million across two funds — $90 million in 2017 and $225 million in 2021.
Its portfolio includes Mamaearth, Propelld, Whatfix, Zouk, Kiwi, and Signzy.
The company plans to invest at a regular cadence across market cycles, Banglani tells businessline. Edited excerpts from the interview:
What is Stellaris Venture’s investment thesis?
Our investment thesis is predicated on the rapid growth of the Indian economy during the 2020s and 2030s. As in other large economies, this growth will largely be driven by the technology industry, which will benefit disproportionately from it. We expect upwards of $1 trillion of value created by the tech industry in India over the next decade... a substantial portion will go to new tech start-ups in India. We want to provide investors with a slice of this pie.
How are your investments split sector-wise?
Stellaris is a technology-focused fund across sectors. One of our key investment themes is the digitisation of Indian small businesses. It will create success stories in, say, fintech as well as B2B commerce. Similarly, artificial intelligence will transform industries as diverse as media and entertainment and IT services. Our focus is on getting these broad trends right in terms of direction and timing, and finding specific market opportunities.
What is your funding pattern?
We raised our Fund 2 of $225 million in 2021, and have built roughly 60 per cent of the target portfolio.
We intend to support portfolio companies over multiple rounds of funding; three subsequent rounds for high-performing companies.
At what stage do you enter? What is your average cheque size?
Stellaris is an early-stage fund. We typically invest $1-3 million in seed rounds, and $4-6 million in series A rounds. Occasionally we enter at a business plan stage when we have extraordinary conviction in the founders or the investment thesis.
What is your timeline for exits?
We are very happy to hold our positions in the best portfolio companies till they go public or find strategic acquisition opportunities. Very few companies in a venture portfolio achieve that level of success, and prematurely selling our stake will depress the returns.
What was your investment strategy in FY23 amid the funding downturn?
Our strategy is not dependent on market cycles. We did eight investments in FY21-22 and nine in FY22-23, when market conditions were different. We expect a similar number in the current financial year as well.
Our investment pace is governed by what we think of as an ‘SIP approach to start-up investing’. By deploying capital at a regular cadence across market cycles, we are forced to raise our bar when everything is looking attractive (as it did in 2021); in down-cycles like in 2022-23, this strategy allows us to take risks and access good opportunities when everyone else is fearful.
We believe there is sufficient capital for good companies in the Series A and B stages. For Series C and later funding rounds, we have advised our portfolio companies to expect delays in fundraising and plan their cash flows accordingly.