Early stage venture investor Leo Capital is planning to launch a third fund as India is set to receive a record USD35 billion in venture funding from global investors.
Over the past three years, Leo Capital has raised USD106 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. Rajul has been a serial entrepreneur for over two decades before setting up Leo Capital. He founded Pine Labs (valued at USD5B in private valuation), GlobalLogic (valued at USD10 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 USD5B in private valuation. Shwetank 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.
Rajul Garg, managing partner at Leo Capital, says: “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.”
“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 internationalise 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 totalled USD33.8 billion. Indian startups received USD26.7 billion in the first three quarters of this year alone, putting the nation on track for well more than USD35 billion in investment by the end of 2021. Since 2014, over 6,500 Indian startups have raised over USD81B in funding and this is growing exponentially year on year. This includes 66 startups that are in the Unicorn Club (at least a USD1 billion valuation), whose combined valuation is USD210 billion. This number is set to reach 100 startups by 2023.
Shwetank Verma, general partner at Leo Capital, says: “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 USD5 trillion, making it the fifth largest in the world, within three years–the country just recently passed the USD3.5 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, founder of Cendana Capital Michael Kim, says: “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 adds: “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.”
