100X.VC plans to invest in 100 early-stage start-ups this year

Combined valuation of first 5 batches of portfolio companies at $211 million

Venture capital firm 100X.VC aims to invest in 100 start-ups in 2022 — more than double of the 41 it funded last year.

The venture capital (VC) firm came out with its sixth cohort of 10 early-stage start-up investments in December.

It estimated that in December 2021, the combined valuation of all its 60 portfolio companies from the first five cohorts was $211 million (Rs 1,583 crore).

The VC fund invested in two batches of 20 and nine young companies each in 2019 and 2020.

But the speed of investments rose in 2021 when it invested in four batches even as the number of start-up funding deals skyrocketed in the wider start-up ecosystem.

According to data from Preqin, 2021 saw a total of 396 seed investment deals worth $706 million being made in the country.

Fashioned on the US-based early stage investor YCombinator, 100X.VC invests in in small cheque sizes of Rs 25 lakh via a convertible instrument called India Simple Agreement for Future Equity (iSAFE) note.

iSAFE allows investors to make a cash investment in return for a convertible instrument. These compulsorily convertible preference shares (CCPS) can be translated into equity when the start-up goes on to raise capital in subsequent rounds. This helps both the investor and the company avoid long-drawn negotiations on valuation at the early stage.

“The six-page document is open source and can be downloaded by anyone. Essentially, iSAFE notes allow early-stage start-ups to skip the tedious paperwork. They help avoid the pre or post-money valuation games, and also prevent large equity dilutions that are typically associated with traditional venture capital rounds,” said Sanjay Mehta, founder and partner of 100X.VC.

Apart from 100X.VC, Mehta invests in start-ups through his family office Mehta Ventures and US-domiciled venture fund 2am VC. As an angel investor, he bet on four start-ups very early that later turned into unicorns.  

“The most important objective is to find good companies early and give other investors a chance to partner with us in the investments. That’s why we invite other angels and VCs to our pitch days that are free of cost,” said Mehta.

“We tell the world that these are our moats and you can join the cap table. And, we make money along with other investors only when we make an exit,” he added.

The focus of 100X.VC investments in 2021 has been in four areas — edtech, fintech, SaaS (software as a service) and vertical e-commerce marketplaces. For the sixth cohort of start-ups in December, 100X.VC had received 2,285 pitches and shortlisted 356. Of this, 10 start-ups received funding. More than 1,00 investors, including VCs, corporate houses, angels and family houses from across the globe were in attendance.

The early-stage fund had announced the first batch in December 2019 with 20 early-stage start-ups. This was followed by 9 start-ups in Class 02, 10 start-ups in Class 03, 11 start-ups in Class 04 and 10 start-ups in Class 05.

However, search for promising internet companies has taken Mehta’s other investment vehicles — Mehta Ventures and 2am VC — to even neighbouring Pakistan this year. They invested in Karachi-based quick commerce start-up Krave Mart’s $6 million pre-seed funding round.