Elev8 Venture Partners, a $200 million growth-stage fund, is all set to invest in five start-ups by the end of this year. The company has already invested in identity verification platform IDfy and astrology start-up Astrotalk.
While fintech would remain a key area of focus, Honagudi highlights that they would exercise caution regarding investments in FLDG lending and P2P sectors
Elev8 Venture Partners, a $200 million growth-stage fund, is all set to invest in five start-ups by the end of this year. The company has already invested in identity verification platform IDfy and astrology start-up Astrotalk.
“We focus on growth-stage tech companies, primarily in Series B and C, with check sizes of $10 to $15 million. We've made two investments, with one in the pipeline, and plan to close the year with four to five deals, maintaining an aggressive deployment strategy,” says Navin Honagudi, Managing Partner at Elev8 Venture Partners.
Honagudi was previously a part of Reliance Venture Asset Management (RVAM), where he led investments in fintech company Paytm. The fintech company, once a rising superstar, went through serious regulatory hurdles from the RBI for persistence non-compliance with KYC norms. Following this, the central bank asked Paytm to stop several services post-February 29. Since then, a lot happened in the world of Paytm with the fintech company receiving a third party license from the central bank.
Speaking about investment in regulated sectors such as fintech, Honagudi expresses caution. He says, “Investing in regulated sectors, particularly in lending, is challenging, especially given the scrutiny of FLDG models and the RBI's crackdown on P2P companies. While it's a sector we may invest in, our approach will be highly cautious, with thorough due diligence.”
However, the company’s focus would not completely shift away from fintech. Honagudi highlights that fintech encompasses more than just lending; it also includes wealth tech, insurtech, and regtech solutions like KYC. While fintech would remain a key area of focus, they would exercise caution regarding investments in FLDG lending and P2P sectors.
Meanwhile, speaking about the increasing quick commerce boom happening in India, Honagudi highlights that it will be an area of focus for them. Amid increased interest from consumers, the sector has been receiving massive funding from investors. For example, quick commerce start-up Zepto in August raised $340 million in a funding round that was led by General Catalyst with new investors Dragon Fund and Epiq Capital.
“Quick commerce will be a focus area for us; however, we will proceed cautiously since many companies in this space have grown significantly. To invest, we need to identify companies with substantial differentiation or unique value proposition compared to the established players,” says Honagudi.
With regards to funding, 2023 was a tough year for Indian start-ups. The funding decreased significantly from $25 billion in 2022 to $11 billion in 2023. Additionally, the funding deal fell to 1,444 deals as compared to 5,114 deals in 2022, as per data from market intelligence platform PrivateCircle Research.
Now experts are of the opinion that the start-up ecosystem in 2024 is showing signs of improvement. In H1 2024, Indian startups raised $5.3 billion in 504 funding rounds, with a 2 per cent drop in funding but a 7 per cent rise in deal count, as per Inc42. However, Honagudi says that while the funding situation has improved, the funding winter is not over. “Investors still have a lot of money, but they are approaching investments with extreme caution,” he adds.