Homegrown venture capital (VC) firm Kalaari Capital’s Limited Partners (LPs) have earned returns of more than $600 million in 2021 alone after the firm’s exit from about 10 companies, either partially or fully.
“We have had about 8-10 solid exits this year, some larger than the others. I think a couple of our funds have returned over 2X the capital raised, and still have significant portfolio holdings in them,” Founder and Managing Director of Kalaari Capital, Vani Kola, told VCCircle in a recent interaction. “I expect that most of our funds will offer somewhere between a 4X to 5X return in total distribution over time,” she added.
Kalaari Capital had launched a fund in 2011, which continues to be its best fund till date in terms of returns. Kola said another opportunity fund that was launched in 2016, continues to give robust returns to its LPs. The VC firm, which is currently investing from this fourth fund, has Reliance Industries as an LP, among others.
According to Kola, about 40-45% of the fund is deployed till date, and the VC firm needs to provide follow-on capital to companies.
Kola’s comments come at a time when Indian startups have witnessed record fundraising from both international and domestic VC and private equity (PE) firms, in a year that has spawned 42 unicorns, or those privately-held companies with over $1 billion valuation, till date.
Kalaari Capital invested $75-90 million in 22 investments so far this year, making it rank among leading private market investors in India in terms of activity. The early-stage VC firm has also partially exited some of its largest portfolio companies including Dream11, Simplilearn, MilkBasket, Shop101 among others this year, generating healthy returns for its LPs in the process.
The VC’s biggest success till date has been its partial exit from fantasy sports firm Dream11, owned by Dream Sports. In a LinkedIn post, dated 1 April 2021, Kola said the VC had returned as much as $206 million to its LPs, without divulging further details.
Kalaari Capital this year has invested in a bunch of sectors for the first time including fintech, ecommerce, SaaS (software-as-a-service), and NFTs (non-fungible tokens). According to Kola, that VC firm continues to be bullish on these sectors.
“We invested in these deep-tech companies, because there’s this growing tsunami in the services industry, to the product industry, to emerging technologies and IP-based companies. These are things which we could not do for two to three years,” said Kola. “I think largely put, all this is bringing this digital transformation, and social behavioral shift in India…it’s representing that in a microcosm,” she added.
Kola added that Kalaari Capital would explore more sectors in the near future other than traditional sectors like retail and infrastructure, in which the VC firm has never invested. “There are several things we don’t invest in, such as traditional retail or infrastructure, because our focus is on tech-led innovation. In that sense, we will look at everything right now. We might believe in certain models or we might not when we actually meet them, but there is no sort of blacklist that I have,” Kola explained.
Kola believes that sectors like B2C (business-to-commerce), edtech and education, fintech, agritech, and food delivery will continue to be ‘sunrise themes’ in the years to come, even if business models of some companies in these sectors continue to change.
Kalaari Capital recently invested in Guardianlink.io, an NFT platform, and in Kola’s opinion, India needs a regulatory framework around crypto and blockchain technology soon. “Many other countries have done that (regulatory framework), and I think it’s important, given the economic implications at many levels,” she said.
“By our estimate, (Indian) NFT companies this year alone have raised over $600 million in venture funding, but they’re putting the company in Dubai or some other jurisdiction to be able to do that, because they can’t do that here. I think we should enable that, and so I think we have to sort of create a thoughtful, regulatory clarity soon on allowing startups to build from here. We have a large blockchain developer group in India, which recently even Mark Zuckerberg and Mukesh Ambani spoke about,” Kola added.
The VC firm recently launched CXXO, a programme that seeks to invest in startups led by women. The mission of this programme, as stated on its website, is to level “…the playing field for women founder-CEOs in shaping India’s digital future by creating exponential value in the economy”. Kalaari Capital has earmarked $10 million for the programme, and backed three firms till date–Samosa Party, kindlife and Creative Galileo.
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