Sailing through tough economic conditions, Kalaari Capital, a new entity formed by the founders of Indo US Venture Partners (IUVP), has raised an investment fund worth $150 million for the Indian market. Though the investment strategy of IUVP fund and Kalaari will be similar, this is a rebranding for IUVP which would help it to bring in fresh ideas and focus on the Indian market, said Vani Kola, managing director, Kalaari Capital Advisors.
The firm also said that it has invested in HandsFree Networks Inc., a US-based provider of automated technical support with offices in Bangalore. According to US SEC filings, HandsFree raised $4 million from a single investor earlier this year.
VCCircle reported in July that the fund has raised $149 million. Kalaari's new fund close as several early stage VCs like Nexus Venture Partners, Helion Venture Partners, Accel Partners India and Matrix Partners India have closed new India funds over the last 12 months.
The rebranding comes as US-based New Enterprise Associates (NEA), which the team had partnered for the first fund (which was called NEA IndoUS Venture Partners), is not associated with the second fund. NEA had partnered with the first fund as it did not have a direct presence in India, but has since set up offices in the country. Another change is that Vinod Dham, who had led the first fund and is well-known for developing Intel’s Pentium microprocessor, will not be involved in the new fund.
“IUVP will continue to function as it is and will be working with the companies it has already invested in. IUVP had invested over a $100 million in 35 companies in the last five years. Similarly, we plan to invest Kalaari’s fund of $150 million over the next four to five years in India,” said Kola. The founders of Kalaari are Vani Kola, Kumar Shiralagi and Rajesh Raju.
Vani and Kumar are the continuing partners from IUVP and are associated with marquee venture investments such as Snapdeal, VIA, Attero, Microqual, Myntra, Medplus, Apalya. Raju is the new partner who joined IndoUS after working as an investment director at private equity firm Peepul Capital for five years.
Kumar Shiralagi, managing director at Kalaari noted, “We have been attracted to invest in technology companies always and would continue to do so. Whether it be software products and services, e-commerce, mobile and telecom Services, education, healthcare, media and clean tech—all are hot sectors within technology.”
However, Vani said the company might look at some emerging sectors also apart from technology. This part of the strategy is reflective by its early bets on pharma chain MedPlus Healthcare (where it netted a healthy exit) and e-waste recycling firm Attero.
IUVP and Kalaari both believe in investing in early-stage companies. “In the time of slowdown, only entrepreneurs who have a long-term plan would think of a start up and we want to back them with enough funding.” Vani said.
Most investments by Kalaari too are in companies that are less than three years old and have received little or no prior institutional funding. Thus, they require capital in the range of $1million to $5million.
Kalaari Capital had already started investing in companies last year. About $40-$60 million has been invested in companies such as Hands Free Networks, Lapis, Magzter, Mettl, Simplilearn, Urban Ladder, Vyome, Zivame. “The total fund of $150 million includes investment of last year as well. We had already raised initial funds by LPs at that time and had started investing,” said Sumit Jain , vice president, Kalaari Advisors.
On the LP front, the Kalaari is optimistic. Most of the LPs for IUVP and Kalaari are from North America. “The successful closure of the $150 million fund despite the current economic environment is a testament to the quality of our portfolio to date as well as the continuing conviction of LPs in our team,” Vani said.
Kalaari advises on investments in companies in the early stages of growth, with Series A and Series B funding. This initial capital is primarily utilised for customer acquisition, market validation, product development and hiring.
Kalaari Capital Partners II, which has backed companies including Hands Free Networks, Lapis, Magzter, Mettl, Simplilearn and Urban Ladder, Vyome and Zivame, is actively considering various other investment opportunities.
On Kalaari’s investment strategy, Kumar Shiralagi, MD said, “We strongly believe in the potential of early stage investing in India and will remain focused on early-stage investments across a wide spectrum of sectors that capture the India growth story.”
“Kalaari’s key criteria for an investment are an innovative business model, market leadership, market size, product advantage, domain expertise, management characteristics and an entrepreneurial spirit.”
Kalaari would remain focused on early-stage investments across a wide spectrum of sectors that capture the India growth story, according to Shiralagi. Rajesh Raju said Kalaari aims to carry forward its highly entrepreneur-centric culture and work towards nurturing great ideas into successful companies.
(Edited by Prem Udayabhanu)