The growth segment of venture capital remains relatively untapped: Sameer Nath, Managing Partner, TrueScale Capital
Sameer Nath is Managing Partner, TrueScale Capital, as well as Iron Pillar India Fund I. He says the opportunity for venture capital growth in India is compelling. TrueScale Capital fills a market gap as a Series B and C specialist. “India Tech is building large, profitable companies. The digitization of the Indian economy has accelerated during the pandemic, ”he told Sudhir Chowdhary in a recent interview. Extracts:
What was the objective of launching TrueScale Capital?
TrueScale Capital fills a market gap in venture capital growth in India as a specialist in Series B and C. Our investment strategy is focused on supporting proven founders demonstrating significant income and growth over large target markets in a capital efficient manner as well as a proven product market fit. We invest in consumer tech companies that are digitizing consumption in India and in enterprise tech companies that make products for the world from India. We leverage trust relationships to access emerging businesses from early stage VCs; working alongside the founders to help scale their business, with a balance between sustained growth and operational profitability, which we believe is the “real” scale.
Why do you think there is a need for a B / C VC series specialist in India?
2016-2020 data from Tracxn shows that early stage transaction volumes were approximately 7 times higher than growth stage. Despite the euphoria of 2021, market data shows that the number of growth-stage transactions fell 23% year-on-year. The start-up segment continues to be dynamic and competitive; the funnel of Series A chords has never been so deep. Growing capital reserves are flowing into the late phase. In contrast, the growth segment of venture capital remains relatively untapped. There is an irresistible opportunity for a local specialist, who does not compete with established venture capital firms for early stage transactions and who can bring relevant expertise to support the founders, to become the investor of choice for B and C series tech companies. TrueScale Capital seeks to become this specialist.
What is TrueScale Capital’s overall investment strategy?
Our experience in venture capital growth investing, coupled with our expertise in mergers and acquisitions and IPOs, is directly relevant to our investment strategy described above. We have built a high quality transaction pipeline and look forward to deploying more capital soon. We are optimistic on several B2C and B2B investment themes. In B2C, our pipeline includes agritech, edtech and fintech. In B2B, we are currently focusing on SaaS, cybersecurity and vertical AI-ML.
What was your investment thesis for investing in Axio Biosolutions?
Axio operates in a $ 12 billion global market that has seen limited innovation. It offers breakthrough products in over 40 countries, eliminating technological risk, and has obtained two US FDA approvals and two EU CE approvals, thereby eliminating regulatory risk. We have been impressed with Axio’s R&D capability as well as its capital efficiency in building a world-class, intellectual property-driven medical technology company. Finally, Axio is backed by leading VCs, which we have all partnered with in the past.
What are the opportunities in the Indian tech sector?
A significant majority of the capital invested in Indian technology comes from international sources. Increased domestic capital and more local investment firms are needed, especially in business growth and late stages segments. International liquidity in these segments has fluctuated and is fueled by macroeconomic signals unrelated to the Indian market. The sustained availability of domestic capital throughout the lifecycle will have a positive impact on the Indian start-up ecosystem.
How do you see the Chinese impact on the flow of funds to India?
India overtook China in venture capital funding in July 2021 for the first time since 2013. In the near term, India is expected to see an increase in funding as global investors leave China. The most important story is that the long-term fundamentals of Indian technology are strong. Indian technology is creating large, sustainable businesses, and the digitalization of India’s economy has grown rapidly during the pandemic. The pace of scale-up and value creation has accelerated. Finally, the environment for IPO and M&A liquidity in India Tech has never been stronger.