- Ventureast, one of the oldest venture capital firms which has been investing in India since 1997, is set to make its first cryptocurrency investment this year.
In 2019, Ventureast Fund Advisors India Pvt Ltd, backer of insurtech unicorn Acko, had worked on the idea of raising a cryptocurrency fund where the commitments would come in the form of cryptocurrencies itself.
“We crisscrossed several parts of the world looking at cryptocurrency from a regulatory and technology perspective, and had also received initial commitments (for the fund),” Sarath Naru, Managing Partner at Ventureast, told VCCircle in an interview. “We eventually abandoned the plan for the crypto fund due to two major corrections in the cryptocurrency market that year.”
However, Ventureast, one of the oldest venture capital firms which has been investing in India since 1997, is set to make its first cryptocurrency investment this year.
“Cryptocurrency is our personal favorite. We are closely looking at the space,” he said without giving more details on the likely startup it intends to invest in.
He, however, added that it does not feel the need now to create a separate cryptocurrency fund to make investments in the space as the idea of cryptocurrency is getting mainstream in India.
Last year, India witnessed the emergence of two cryptocurrency unicorns, CoinSwitch Kuber and CoinDCX despite regulatory uncertainty. Unicorns are private companies with a valuation of at least $1 billion. Besides, in a positive turn of events for the industry the Indian government in the Budget announced recently proposed 30% tax rate on income from virtual assets.
While the tax rate is largely deemed to be steep, it signaled the government’s recognition of country’s cryptocurrency industry.
The venture capital firm’s first cryptocurrency investment will be made from its existing technology-focused vehicle called Ventureast Proactive Fund II that had raised over $80 million.
Naru said that there is still dry powder from the fund and it aims to make three to four new investments this year as well as do follow on deals. “The fund will be fully committed by the end of this year,” he added.
He also noted that apart from cryptocurrency, digitization in the edtech, healthcare and fintech segments has been proliferating. “You will see us hugely playing B2B2C in education and healthcare,” he said. B2B2C is short for business-to-business-to-consumer, where startups target both segments.
Broadly, Naru explained, Ventureast will continue to scout for investments in the small medium and enterprises (SME) segment with technology as a differentiator.
“We are continuing to stick with what we are good at – focusing on the underserved market. It is not about the technology, we look at the market first and then look at the technology,” he added.
In 2021, Ventureast’s new investments included software-as-a-service (SaaS) platform Toch.ai, deep tech startup Cron AI and car repair and service provider Pitstop. It also made around six follow-on investments, said Naru. Notably, its portfolio firm Acko also entered the coveted unicorn club last year after raising $255 million as a part of its Series D round led by private equity firms General Atlantic and Multiples Private Equity.
Last year, Ventureast was also in the news for exits. It fully exited Richcore Life Sciences and Indus OS and made a partial exit from PerPETual Global and MoEngage.
However, Ventureast also got entangled in a legal dispute involving its exit from Indus OS. It began with Walmart-owned PhonePe’s move to acquire Indus OS in the middle of last year. Following this, Indus OS’ existing investor Affle Global Pte Ltd stated that it has no inclination to support the ‘low-balled’ $60 million offer from PhonePe. Subsequently, PhonePe filed a lawsuit against Ventureast and Affle in the Singapore High Court and it also filed a complaint with markets regulator SEBI (Securities and Exchange Board of India) against the venture capital firm.
The matter is still in court, said Naru without providing further details.
In 2022 as well, Ventureast is looking at around five full and partial exits. Two of the exits is expected to happen through the initial public offering (IPO) route. Its packaged organic food firm Sresta Natura Bioproducts has already filed draft papers with the market regulator for an IPO and Ventureast is expected to sell a significant portion of its stake in the process. It is also expected to exit during the IPO of its healthcare company that is soon expected to file draft papers, added Naru without disclosing further details.
Meanwhile, Ventureast is also expected to make internal promotions and make hire at a leadership level this year as it seeks to create a more sustainable and vibrant management structure.
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