The performance of Fund 2 was a big driver for investors having comfort and confidence in our ability to identify and work with exciting new companies. Our concentrated portfolio approach has also been a significant differentiator. We had an exit in the form of Embibe in late 2018 and since then have seen Rebel Foods and Droom both raise large rounds and significant increases in value. In addition to these liquidity and valuation aspects, the core operating metrics of the portfolio are doing well.
Has the fundraising scene improved for VCs? Are there any investors in the fund who are investing in India for the first time? What's you mix of offshore/onshore investors?
The India story remains intriguing to most LPs (limited partners). People are bought into the fact that the market is large and over time technology driven solutions will be the preferred method of consumption. In fact our belief is that we are in the midst of a paradigm shift where new age, technology based companies are taking over from many of the old world businesses. We are at the start of this trend and expect many industries to get disrupted in the coming years. The main question in most LPs minds is when and how will exits be achieved. The exits of Flipkart and the Oyo stake sale have helped address some of that concern.
We have a few LPs who are investing in India venture for the first time. All of our investors are offshore
How have companies in fund 2 scaled up; what have they done well?
Overall the operating strength of Fund 2 is what enabled us to raise Fund 3. Each company has set out to offer a unique and differentiated value proposition for consumers. In doing this, there was a fair amount of iteration and reassessment that took place. Today all of the businesses in Fund 2 have found their product market fit, have hit their stride and are scaling up.
Rebel Foods has redefined the restaurant business. It has the largest number of restaurants operating on a cloud kitchen network in the world. The company recently raised $125MM to expand its operations to South East Asia and the Middle East.
Furlenco has been a pioneer in the furniture subscription space. They have established their position as the global leader in this space, having served 80,000 subscribers to date.
Melorra has established that there is a massive market for well-designed jewellery. The company operates a zero-inventory, negative working capital model business that is growing at 15 per cent month-on-month.
Droom went against the conventional classifieds models in the used auto space and established the leading used automobile marketplace. To do this, the company built out an ecosystem of tools for customers and dealers including Orange Book Value (the default used pricing guide), ECO (an auto inspector network) and Droom Credit (a credit platform for used vehicles). These innovations have allowed Droom to scale the business across India and into global markets as well. Droom currently operates in Malaysia, Thailand, UAE and Oman. The company is doing over $1 billion in GMV with a very attractive take rate.
Can you update us on your legacy portfolio in terms of exits and write-offs? (Lightbox had acquired the portfolio of Sherpalo Ventures & Kleiner Perkins in India; Murthy worked at Sherpalo)
Visa recently came in as a strategic investor in Paymate. This money is being used to help the business scale operations in India and expand into the Middle East and South East Asia.