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Top VCs cut big cheques for idea stage startups

Investors like Sequoia, Matrix & Lightspeed eye Series-A deals from seasoned founders, executives.

, ET Bureau|
Updated: Aug 09, 2019, 08.07 AM IST
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Returning entrepreneurs, who have been a rare breed in India, had always found interest from VCs as they were safe bets, but top executives from large startups are increasingly able to rack up big rounds.
BENGALURU: Top venture capital investors, including Sequoia Capital, Matrix Partners and Lightspeed Venture Partners, are cutting large cheques for second-time founders and seasoned industry veterans for idea stage startups, as they look to get in early on the most competitive seed and series-A funding deals.

Last year, it was Freecharge founder Kunal Shah and Ibibo group founder Ashish Kashyap who snagged $25-30 million in their first financing round, while Citrus Pay co-founder Jitendra Gupta is now believed to have scooped up around $24 million for his yet to launch fintech startup, Amica Financial Technologies.

Gupta, along with Vishnu Jerome of law firm Jerome Merchant and Partners, is close to raising its series-A from Matrix Partners, Sequoia Capital, Beenext, along with angels like Swiggy’s cofounder Sriharsha Majety, and Kunal Shah, who is now running Cred, two people aware of the development said.

Returning entrepreneurs, who have been a rare breed in India, had always found interest from VCs as they were safe bets, but top executives from large startups are increasingly able to rack up big rounds.

Google Tez top executives Sumit Gwalani and Sujith Narayanan are raising about $7 million from Sequoia Capital, Ribbit Capital, and a clutch of angels for their fintech venture EpiFi Technologies, sources confirmed to ET.

Others joining this growing tribe include former Paytm vice-president Amit Lakhotia, who was responsible for building the product piece at the digital payments firm in its early days. Lakhotia is in talks to pick up about $8-10 million from Matrix Partners, Sequoia Capital and angels for his startup, people familiar with the deal told ET.

“Understanding how business gets built, and seeing the scale up journey gives a lot of perspective, learning and adds credibility,” Lakhotia, who went on to work with Indonesia’s ecommerce unicorn Tokopedia, said. “For an entrepreneur, where the odds are against them, the ability to hire, raise capital, and align business stakeholders is very critical and VCs value that experience,” he said. Lakhotia, however, declined to comment on funding for his new startup.

Nipun Mehra, the chief product and strategy officer at PineLabs and ex-Flipkart executive, is also raising about $6 million from Lightspeed Venture Partners and Sequoia Capital to build a commerce and payments platform in Indonesia, multiple people said.

Anurag Sinha, the founder of personal finance app Walnut, has racked up about $4 million for his latest startup, OneScore — an app to find and monitor credit score.

Emailed queries to these secondtime founders did not elicit a response till press-time.

“The Indian market has evolved a lot in the last few years, infrastructure is better, capital is available across stages and most importantly, the number of second-time entrepreneurs has increased,” said Teruhide Sato —founder and managing partner of Singapore-based early-stage fund Beenext. “We have invested in a lot of such founders including BharatPe, Mobile Premier League, and Mfine.”


The bullishness to back these executives is also partly because some of the most valuable startups in the Indian startup ecosystem have been founded by second-time entrepreneurs or seasoned professionals, including Flipkart top executives Vaibhav Gupta, Amod Malviya and Sujeet Kumar who started Udaan, an online marketplace for small and medium-sized businesses, Myntra founder Mukesh Bansal and Freecharge’s Shah.

“To scale businesses in certain sectors like financial services, supply chain and technology, you need an experienced team,” said a top venture capitalist, who has backed such companies.

Investors and industry watchers say most founders and top executives are closely guarding their equity and may not want to shell out 20-25% at discounts, which is the reason why they get large cheques and high valuations.

Research also suggests second-time founders have a much higher chance of having another exit. Entrepreneurs with a track record of success are more likely to succeed than first-time entrepreneurs and those who have previously failed, according to a research paper from Harvard Business School titled ‘Skill vs Luck in Entrepreneurship and Venture Capital’.

Also, most unicorns in the United States were started by experienced founders and executives, data indicates.
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