, co-founder and managing director of Helion Venture Partners, is launching an early-stage fund to raise $100 million (Rs 645 crore). In an interview
with Ranju Sarkar
, he shares the investment thesis for Unitary Helion, which will back credit and payments businesses that drive marketplaces in agriculture
Why did you decide to float a fund? What happens to Helion?
has been launched to address the growth opportunity in the new-to-credit, new-to-banking households and small businesses in India. The demand for formal transaction and credit runs so deep that it would take a decade to fill the gaps and many large companies
would be born in the process. Helion would continue to deliver value to the investors in the three funds that were raised. As people have a long-term association with Helion, we remain committed to driving the optimum value for these investments by providing support and guidance through our Board roles and backoffice support. There is no immediate plan for Helion, except managing the portfolio to the best of our capabilities.
What’s the investment thesis of your fund?
The thesis of the fund is to invest in networks, payment and lending businesses. The fund will invest in opportunities that work on innovation using the Indiastack and India’s move towards a cash-free economy. There are hundreds of millions of Indians who are still reliant on informal transaction and credit networks. This prevents them from accessing the resources and benefits of the formal economy. There is a tremendous opportunity to create new formal marketplaces by creating incentives like credit, business growth and digital payments. The payment flow that occurs on all these networks at scale could exceed $25-50 billion a year. Lending can be in the form of supply credit, business loans and personal loans around the intelligence of transaction data and secured through payment flow.
Why do you find these spaces attractive?
The lack of tech adoption by Indian small businesses, high cost of capital, the active nature of tens of millions of small businesses and the absence of industry dominant participants, unlike the US, have created a vacuum where inefficiencies and friction hinder growth and prosperity. Businesses are stunted, credit flow is slow and supply chains are inefficient. But, this situation is set for disruption. With the increase in data through digitisation, businesses that allow for value chain efficiencies and ease of scaling transactions will prosper. The headroom for growth is humongous. The percentage of population with credit history is less than 20 per cent. Consumer loans and SME loans as a proportion of GDP is only 14 per cent and seven per cent, respectively. Bank accounts that are less than three-year-old are in excess of 250 million. India’s move to a cash-free economy will bring in hundreds of billions of payment flow to digital switches.
How is the fund-raising environment, given that a lot of money was raised last year?
Better than ever before. India is being seen as a stable, bright spot, in addition to it being a fast-growing, $2-trillion economy. India has been called as the most attractive market outside their home market by practically every tech major. The dynamics of Aadhaar and IndiaStack are well understood by foreign investors. The number of institutional, prominent VC firms is still where it was 10 years back. New managers are coming with new investment thesis.
How have exits been for venture capital in India?
Venture Capital in India still holds a lot of promise. Globally, tech-based companies
offer the best return on capital. Technology is taking over the world. Venture capital remains the early detection platform to participate in this growth. It would increasingly be the case that large tech companies
stay private longer. Sometimes, they do not get to the public market until much later. The promise has been met on one count that India venture is able to invest in companies
that grow rapidly and on paper are providing returns. Payment is an exception where liquidity has been one of the highest, as payment companies
mature early in their niches. So, leaving aside broad liquidity, LPs (limited partners) are comfortable with the current returns built on stable valuations and availability of late stage demand for these companies.