Early-stage investor Titan Capital has completed the final transaction of its new opportunity fund for Rs 333 million.
The funds will be deployed to the company’s existing portfolio companies at a later stage, the company said.
Titan Capital, led by Snapdeal co-founders Kunal Bahl and Rohit Bansal, typically invests in seed or pre-seed stage startups.
ET had reported in August that the Titan Capital Winners Fund had an initial close of Rs 200 crore and was likely to exercise its greenshoe option to increase the fund’s total size.
This is the first time Titan Capital has raised external capital. So far, investments have been made from the personal capital of Mr. Bahl and Mr. Bansal.
Under the Titan Capital banner, the duo has backed over 280 startups and emerging economy companies since 2011, including Mamaearth, OfBusiness, Razorpay, Urban Company, Ola, and Shadowfax.
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Barr said the new fund will invest exclusively in follow-on rounds of companies in Titan Capital’s seed portfolio and leverage high-signal data to make informed investment decisions. Around 20 companies will be supported through the fund with an average check amount of Rs. 15 billion.
Titan Capital has already made three investments from the fund. Among them are Bangalore-based Convin, which is building an AI co-pilot for customer-facing teams, Beco, an eco-friendly direct-to-consumer household needs brand, and a software-as-a-service startup. Simple and smart included.
Two to three more deals were found to be in the final stages.
In an interview with ET, Bahl explained the rationale behind Titan Capital’s decision to launch an opportunity fund.
“We have two pools of capital: Titan Seed and Titan Winner. Titan Seed is our (Bahl and Bansal’s) proprietary capital. We typically invest very early on for that. …(Here) the company is very young but has green shoots of product-market fit. As the company grows, we will participate in subsequent rounds on a pro rata basis. “But rather than looking for multiple new investors, the founders are hoping to find perhaps one outside investor and let us fill out the rest of the round,” he said.
We will invest in pre-Series A and Series A stages from this fund, while continuing to support seed-stage startups from our initial pool of capital.
“On the other hand…over the years, a number of industry peers, family offices, have reached out to us to partner and invest with us,” Barr said. “We felt this vehicle was a good opportunity to bring those people into a good company.”
The bulk of the capital in the company’s new fund is being invested by Mr. Bahl and Mr. Bansal, with the remainder coming from Titan Capital’s portfolio startup founders, Indian family offices, and senior Indian executives. .
“We felt this was a good opportunity to build an ecosystem of proven, well-connected and well-resourced talent who can support startups,” Bahl told ET.
Return profile
On July 31, ET reported that Titan Capital has completely exited its investment in home services platform Urban Company, realizing a nearly 200x return on its nine-year seed investment. In 2015, it invested 57 million rupees and exited with 111 million rupees.
Other investments where Titan Capital has delivered over 100x returns including unrealized returns include Ola Cabs, OfBusiness and Credgenics. It has fully exited Ola Cabs, partially exited Credgenics and continues to hold a stake in OfBusiness.
Titan Capital also partially exited hyperlocal logistics company Shadowfax during its February round of funding from TPG NewQuest, but continues to hold a majority stake in the startup.
Barr said investors’ return profiles may change because they invest in later rounds than usual, but loss rates will be lower.
“Typically, the loss rate is lower as the work progresses. In the early stages, the loss rate is higher because the company is at a very early stage and has a lot to prove. (In later stages) “More companies will do well and fewer will fall by the wayside…The return profile will be different, but the risk will be proportionately lower,” he noted.
Through the initial public offering (IPO) of Honasa Consumer, the parent company of Mama Earth, the Snapdeal founder duo realized around Rs 780 million. They are now completely out of the company.
On November 8, ET reported that Bahl and Bansal had announced that they would reinvest all profits from Mama Earth’s IPO into other startups.
Mr. Bahl and Mr. Bansal are also promoters of e-commerce enterprise software developer Unicommerce, which was floated on the stock exchange on August 13 at a high premium. It was listed on the National Stock Exchange (NSE) at Rs 235 per share, more than double the issue price of Rs 108.
