Techcircle Startup Walkabout Pit Stop III – Matrix Partners

On the second day of the Mumbai edition of 'Techcircle Startup Summit 2015', Walkabout participants' first port of call was the Matrix Partners office. Matrix Partners India is an investment firm with Rs 3,000 crore under its management and its investment portfolio has a level of diversity that not many VC funds can boast of. It makes seed-stage VC deals as well as larger ticket transactions where it participates in growth equity PE investments. Most of its investments straddle a consumer interface. Its marquee investments include Ola and Quikr.

As we gathered around the venture capital firm's two vice-presidents, Rajinder Balaraman and Gourav Bhattacharya, the big question was: How does an investment firm like Matrix decide which startup to invest in?

"We do not evaluate a startup in isolation for investment. Rather, we evaluate the whole industry and see whether the startup has something different to offer," said Bhattacharya. And age of the promoters was definitely not a criterion, he assured the young entrepreneurs.

As he put it, Matrix values the idea and the team more than the revenues when considering a seed funding.

Talking about its investment outlook, Balaraman said Matrix Partners would focus on solutions that can address the needs of the ever-increasing number of online consumers in India. Citing a recent Assocham-Grant Thornton study, he said the number of online shoppers is expected to increase to 40 million in 2016. "It's just a matter of time before the number reaches 300-400 million. Therefore, online endeavours that target to influence this massive population will attract Matrix's interests in the future."

The conversation veered to the problems facing the food-tech sector. Both Balaraman and Bhattacharya held the view that a lot of startups in the space have received VC backing, so some form of restructuring and consolidation is bound to happen. However, investing in food-tech is not a mistake, they said, but since it was a challenging market, 4-5 years would be required before it stabilises.

Food-tech startup TinyOwl Technology Pvt Ltd, soon after sacking about 100 staffers as part of a restructuring exercise, raised $7.5 million (Rs 50 crore) in fresh funding from existing investors Sequoia Capital and Matrix Partners.