Venture debt pioneer Trifecta Capital has raised Rs1,500 crore for its maiden equity fund called - Trifecta Leaders Fund – I and is looking to raise another Rs375 crore under a green shoe option to tap strong investor demand for its fund, said a senior executive in an interaction with Mint.
The fund was launched in May 2021 in the midst of the second wave of covid-19 pandemic and announced its first close in July 2021. The maiden equity fund of Trifecta is focused on investing in late-stage Indian tech startups.
The fund has so far invested Rs730 crore in eight late-stage startups such as Dailyhunt, Livspace, Cars24, Pristyn Care, ixigo, Good Glamm Group, API Holdings (Pharmeasy) and Meesho.
“We have built a highly diversified portfolio and the common trend across all of these is that most of these companies are category leaders. All of them have a strong underlying long term growth prospect. They've demonstrated solid unit economics; in many cases are profitable in certain lines of business and they are incredibly well capitalized; just the cash on the balance sheets of these companies now is about Rs17,000 crore, which means that they can get through a good two years without having to raise any more capital,” said Rahul Khanna, managing partner of Trifecta Capital.
He added that many of these companies are on a path to getting to a liquidity event in the next 12-24 months and a couple of them could actually go for a public listing fairly quickly.
While the fund invests in crossover opportunities where companies are preparing to go for a public listing, Khanna said that it is not a pre-IPO focused fund.
“This is not a pre-IPO fund, and I think now the difference will become much clearer between funds that were trying to arbitrage timing and funds like ours that had a fundamentally long-term view on a structural gap in late-stage venture capital,” said Khanna.
Trifecta sees a good opportunity for late-stage investments in 2022, especially in light of recent developments where tech stocks in the US have seen a sharp correction.
“Whatever we're seeing in the markets, what's played out in the US and some of that has played out in India too. So, 2022 could also be a very good vintage year for making new investments, because some of the valuations would likely correct on new deals as well. Companies that do need capital will raise and hopefully valuations can be more attractive,” said Khanna.
Trifecta hopes to deploy the entire fund in the calendar year 2022.
Apart from domestic investors, the fund has also seen interest from foreign investors who are keen to tap the Indian tech companies that are likely to go public. About 15-20% of the fund corpus is likely to come from foreign investors, said Khanna.
On the domestic side, the fund has received commitments from several insurance companies and asset management companies as well as large family offices.
“Investors have appreciated our disciplined portfolio construction approach and the eight investments completed to date have only underscored Trifecta Capital’s proprietary advantage in sourcing and evaluating investments in some of the most attractive tech companies in India,” said Lavanya Ashok, partner at Trifecta Capital.