Venture capital firm Eight Roads Ventures, which has been investing in India since 2007, on Tuesday announced the launch of its first India-dedicated life sciences and healthcare fund of $250 million.
"Healthcare has always been a key focus for us at Eight Roads globally. About 40-45% of all of our investment have been in the healthcare sector and the balance being in tech, consumer, fintech etc.," Prem Pavoor, senior partner, head of India & Healthcare Investments at Eight Roads Ventures, told VCCircle in an interaction.
"The launch of this healthcare fund reflects our confidence in the evolution of the India market
and our commitment to help ambitious founders scale," said Daniel Auerbach, senior managing partner and head of Global Ventures at Eight Roads Ventures, in a separate statement.
Pavoor explained that when he had joined Eight Roads in 2008, the healthcare sector had two mainstay themes - pharmaceuticals on the generic side and healthcare services covering hospitals and diagnostics. However, in the last two to three years, a number of new themes have become the mainstay of healthcare such as digital health, consumer health, self-care, medical devices and technology, point-of-care devices, animal health, drug discovery and biotech.
This has largely been driven by two main factors - firstly, the coronavirus pandemic and second, the tailwinds from government policies such as the Ayushman Bharat, a health insurance scheme, rolled out in 2019, and the National Digital Health Mission (NDHM) floated last year, he added.
The life sciences and healthcare fund will continue to follow the same strategy that Eight Roads Ventures has been following for its healthcare bets in the country. "We are sub-segment agnostic, stage agnostic and investment size agnostic. We are happy to make small size investments and even growth stage ones that will go up to $40 million," said Pavoor. The fund aims to invest in 15-20 companies over a period of three to four years.
The fund will also continue to follow a two-pronged strategy for its investments in companies. First is the win-from-behind strategy that involves investment in segments established in healthcare which is largely pharmaceuticals and healthcare services. The second strategy is to invest in companies with an aim to build leaders in segments that are still nascent. Pavoor also said that the venture capital firm also looks at a “differentiation” factor while making investments and is not hesitant to take a "contrarian" bet that he believes will reap greater returns.
For instance, in 2012 it invested in Laurus Labs "when almost no one was investing in the API (active pharmaceutical ingredient) space. Similarly, its investment in Cygnus Hospitals was driven by its team's "new age approach" to building companies even as investments in regional hospital chains were already happening. In 2019, media firm Amar Ujala Ltd acquired a majority stake in Cygnus for Rs 130 crore. Cygnus subsequently got rebranded as Ujala Cygnus.
Eight Roads Ventures' most notable investment in a new age healthcare company in India is in API Holdings, the parent of e-pharmacy platform PharmEasy, which is bound for a Rs 6,250 crore (around $800 million) initial public offering (IPO). Its other bets in the space include consumer healthcare company Cipla, injectable drugs manufacturer Caplin Steriles, animal health company Ashish Life Science, blood plasma products provider Plasmagen Biosciences, practice management software provider for US dental clinics CareStack and dental aligners Toothsi. It is also an investor in cellular immunotherapy company Immuneel Therapeutics, co-founded by Kiran Mazumdar-Shaw, chairperson and managing director at Biocon. Last month, Eight Roads Ventures led a Series A funding in Doceree Media India Pvt Ltd, which runs physician-only platform Doceree.
Pavoor also said that Eight Roads has expanded its team aggressively over the past 18 months and will continue to expand. It currently has close to 15-member healthcare-focussed investment team in India.
Eight Roads has backed over 60 companies in India since 2007. Its non-healthcare bets include Icertis, Shadowfax, Whatfix, MoEngage, Quizizz, Chai Point, Early Salary and Securonix.
India has a few other healthcare focused private equity and venture capital funds including Quadria Capital, InvAscent, Somerset Indus Capital Partners, Tata Capital Healthcare Fund, Asian Healthcare Fund and Alkemi Growth Capital.