8i Ventures announces first close of second investment fund worth $50 mn

Early-stage venture capital company says fintech 'single largest opportunity in India'

8i Ventures, an early-stage venture capital fund for fintech and commerce, announced on Thursday the first close of its second $50-million fund.

The firm raised $25 million in its first close, 50 per cent of its targeted assets under management, largely from family offices of the Salgaocars and Kothari (DSP) who have also invested in 8i Venture’s first fund. The second fund was launched in December last year.

8i Ventures Fund II had seed rounds with $1.5 million to $2 million cheques and it expects to back companies with investments of up to $10 million across subsequent rounds, the company said in a statement.

“We believe fintech is the single largest venture opportunity in India. Every single friction point in India’s financial economy is a potential billion-dollar start-up opportunity. Our key insight when we launched Fund I was that consumer payments and commerce is a trillion-dollar opportunity,” said Vikram Chachra, founding partner, 8i Ventures.

“Since then, digital payments have swelled from $200 billion a year to $720 billion now. With Fund II, we have an added focus on B2B fintech and commerce - which we believe to be the next trillion-dollar market in India,” he said.

In April this year, the firm partly exited from a seed investment in its portfolio company M2P Solutions Pvt Ltd (M2P) with a 36x multiple over 2 years.

“At 8i, we wrote the first cheque into several outliers that at inception, were unobvious winners. That’s because we partnered with founders targeting under-served categories, ignored by incumbents/industry players. Collectively, our Fund I portfolio winners already process $18 billion of payments annually, while generating $100 million in gross profits, between them.” said Vishwanath V, general partner, 8i Ventures.

“For Fund II, we will follow the same thesis, but with a larger ownership across our investments. We are seeding companies with $1.5 million - $2 million cheques, going up to $10 million across subsequent rounds,” he added.

The firm said its first fund is up 270 per cent with a 100 per cent internal rate of return (IRR) in three years, driven by early-stage investments in companies like Slice, M2P and Blue Tokai. It has returned 27 per cent of its capital back to investors.