Early stage venture fund Leo Capital plans to launch a new fund following two successful funds.
Early stage venture fund Leo Capital plans to launch a new fund following two successful funds. This comes hot on the heels as India is set to receive a record $35 billion in venture funding from global investors. Over the past three years, Leo Capital has raised $106 million for two funds from investors around the world seeking technology centric opportunities in India and Southeast Asia.
Leo Capital was established by Rajul Garg and Shwetank Verma in 2017. Garg has been a serial entrepreneur for over two decades before setting up Leo Capital. He founded Pine Labs (valued at $5 billion in private valuation), GlobalLogic (valued at $10 billion on exit) and Sunstone Education (leading business education company in India). He started angel investing in 2011 before setting up Leo Capital. He was the first investor in Meesho, India’s largest social commerce company, valued at $5 billion in private valuation.
Verma, meanwhile, worked for the investment institution Clermont Group, making investments in education and healthcare before joining Metlife Asia where he led work on innovation and partnerships with startups. In between, he also founded start up MyHealthMate, which was acquired in 2016.
“Having been a founder several times over, I know first hand the opportunity and challenges startups face. As a team we’re well versed on the early stage signals that matter and are able to quickly engage in opportunities and be the first to write seed stage cheques for these businesses which we know have the right team and plan to scale. We pride ourselves on our track record of having helped build category leading technology companies multiple times,” said Garg, managing partner at Leo Capital. “It’s our approach that drew global investors into our first two funds and we quickly became a beacon for investors in the US, Europe, and Japan when they first started to internationalize their venture investments. We have feet on the ground and courtesy of our long careers here we are very familiar with the ecosystem.”
The Indian start-up ecosystem presents a blossoming opportunity for global investors. India is set to surpass the record level of total investment it saw last year when venture funding totaled $33.8 billion. Indian startups received $26.7 billion in the first three quarters of this year alone, putting the nation on track for well more than $35 billion in investment by the end of 2021. Since 2014, over 6,500 Indian startups have raised over $81 billion in funding and this is growing exponentially year-on-year. This includes 66 startups that are in the Unicorn Club (at least a $1 billion valuation), whose combined valuation is $210 billion. This number is set to reach 100 startups by 2023.
Verma, general partner at Leo Capital, said “There is abundance of opportunity in the startup ecosystem across India and Southeast Asia, where a Unicorn is born every week. India’s maturing startup ecosystem has moved well beyond just consumer apps and there is a booming domestic stock market that has shown investors a path to liquidity that has not always been there. On this latter point, India’s public market could grow to more than $5 trillion, making it the fifth largest in the world, within three years–the country just recently passed the $3.5 trillion threshold. There are 150 private companies waiting in the wings that could potentially list on the market within the next three years.”
One of the investors in Leo Capital, Cendana Capital founder Michael Kim said, “Seed stage managers like Leo Capital present the perfect partner for us as we seek opportunities in India and Southeast Asia. They offer more than the first cheque but bring an array of experience and networks to founders having successfully founded startups themselves, indeed Rajul is a two-time unicorn founder. They present a proposition that is unmatched in the region and we look forward to working with them.”
Garg added, “The biggest joy for me is when I see and hear about portfolio companies from people. When I go to a restaurant in Delhi and swipe my card on a Pine Labs PoS, or when I talk to a software tester praising Lambdatest, or seeing a material environmental impact through using IPL’s Electric trucks. We look for businesses with a vision and a business model that can scale to enduring, impactful large enterprises. We stay true to technology centric companies, with a firm belief that technology creates exponential impact and value. We can invest very early, at a concept stage, or we can invest a little later depending on the space itself, traction, ability to scale and other factors. Our spaces of interest include participative commerce, Insure-tech, fintech, Web3 and Global SaaS companies.”
Leo Capital is focused on two investment themes. Firstly, technology based India domestic consumption startups – consumer internet, commerce, healthtech, logistics, edttech, fintech, insurtech, and other sectors linked to GDP growth. And secondly, global technology companies from India, for example, Southeast Asia centric companies or global SaaS companies.