Inflexor Ventures aims to raise Rs 1,200-1,700 cr for its third fund

VC firm to expand investments in India's technology sector, 'build on success' of previous funds

Inflexor Ventures is preparing its third fund that aims to raise between Rs 1,200 crore and Rs 1,700 crore, as the venture capital firm expands its investments in India’s technology sector.

“We believe that this fund will enable us to further scale our efforts and enhance value for our investors as we continue to build on the success of our previous funds. We are also excited to work with founders building for India and the world,” Venkat Vallabhaneni, managing partner, Inflexor Ventures, told Business Standard in a video interview.

The company’s first fund was valued at Rs 75 crore and the second one raised more than Rs 600 crore. The two funds have supported 25 companies, with three successful exits.

“When we started investing in 2015 few challenges were finding companies mature enough to be invested in and then helping the companies go to the next round of investment,” said Vallabhanenia. “Since we started, there's definitely a lot of change, our initial concerns of depth of the ecosystem has been resolved. Secondly, the maturity of the founders. It has been changing along with the ecosystem itself. We are finding very good talent and investable companies out there.”

Inflexor typically invests between $1-2 million in seed stage deals and $3-4 million in Series A rounds, with total exposure to a company reaching up to $8-10 million over its lifecycle. It focuses on deep technology, cybersecurity, consumer  technology , logistics, health care, and aerospace sectors.

“First, we look at whether the founder has talent and resiliency and how they think, next comes market size, market strategy, their financial plan and execution,” said Vallabhaneni.

The venture capital industry has experienced multiple cycles over the years and the most recent boom in 2021-22 was fueled by high liquidity and “excitement in the markets”, according to Vallabhaneni. The past two years were challenging as funding declined. There are signs of recovery and investments are picking up.

Vallabhaneni said he viewed the correction as a “positive reset” for the Indian ecosystem, bringing valuations back to more sustainable levels. He noted that the earlier frenzy placed too much emphasis on rapid growth and inflated valuations, compressing 10 years of growth into two. Now, with more realistic valuations, particularly in late-stage funding rounds, the funding ecosystem is returning to normalcy, paving the way for healthier growth moving forward.