Don't Take the First Cheque, Finding the Right Investor Essential for Startups: Vikram Gupta Gupta set up IvyCap in 2011 on the back of a belief in immense potential within the domestic market, with a concept revolving around the IIT alumni ecosystem.
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From betting on new technology to macro funding Punita Sabharwal, managing editor, of Entrepreneur India had a compelling fireside chat with Vikram Gupta, Founder of IvyCap Ventures, diving into India's evolving startup landscape.
Gupta set up IvyCap in 2011 on the back of a belief in immense potential within the domestic market, with a concept revolving around the IIT alumni ecosystem.
"We set up India's first IIT alumni-focused fund r and I went back to those institutions for the first fund itself and we had close to 20 Indian institutions in the first fund," recalled Gupta.
The venture raised approximately INR 240 crores for fund one, with 20 per cent coming from the IIT alumni and the rest coming from institutions based in India. IvyCap currently manages close to INR 5000 crore today, with the firm being one of the largest homegrown venture capital (VC) funds with a portfolio of 55 companies, with an imminent third fund close to INR 2,100 crore in size.
Talking about notable exits the firm has made Gupta mentioned Purplle, an online beauty product aggregator that came through the mentioned IIT ecosystem.
"So when we invested in Purple in 2015, we put in INR 15 crores and took a 30 per cent stake in the company. The company was very small at that time. Most of our companies like Purple came through our IIT ecosystem. Again we took a 30 per cent stake in the company. We got an exit from Purplle in 2021 making it India's first dragon exit. A dragon exit is something that gives you more than 1x of the entire fund as an exit value. An Indian investor has never seen that before," said Gupta.
Gupta also mentioned that the firm expects potential dragon exits with a portfolio featuring companies like Biryani By Kilo, fintechs, and health tech companies.
Speaking on relationships shared between an investor and an entrepreneur, Gupta said that he feels the ratio changes when startups scale from early stages to higher stages.
"Up to series A when you are raising seed capital, for example, I think it's a great time to be an entrepreneur at that stage because the number of investors out there who are willing to write INR 1 crore up to INR 10 crore cheques is substantially increased in India and I think that's a boon for Indian entrepreneurs. I think on the other hand the number of investors who can write a 50 million dollar cheque from series C, D onwards has actually gone down in the last few years. So that is like a little bit of skewness in that kind of a thing," said Gupta.
During the fireside chat, Gupta also reviewed the current funding ecosystem by saying there are tons of investors out there and it is very crucial to choose the right investor through the startup's journey.
"It depends on what stage you're at I think if you're at seed stage or pre-series or series A, the good news is that you will have tons of investors out there and startups will be on the better side of negotiations. So make sure that you don't accept the first check that comes your way, get what you believe is the right for you in terms of the partner," said Gupta.
