Exclusive: Netmeds backer Sistema Asia Capital defers raising second India fund to next year

Sistema Asia Capital, the early-to-mid stage focused venture capital firm backed by Russian conglomerate Sistema PJSFC, has deferred the timeline for raising its second India-specific fund to next year.

The firm will now start conversations with third party limited partners, industry parlance for investors in venture capital funds, in April next year, Dhruv Kapoor, partner at Sistema Asia Capital (India), told TechCircle.

TechCircle had reported in December last year about the firm’s plans to go on the road this year for a $150 million second India fund.

While Sistema PJSFC is expected to commit up to 50% of the targeted corpus, in a departure from the firm’s earlier strategy, the remainder will be raised from third party limited partners, Kapoor had said at the time.

“We planned on doing it (raising the second fund) this year but Covid-19 happened and international travel is restricted… while the sectors we will invest in continue to remain the same, we will lead a lot more deals and write larges cheques of upto $10 million for companies we are very bullish about,” Kapoor said on the deferred fundraising.

The firm continues to invest in companies here from its first fund of $120 million, which announced its first close in 2018. 

The firm also recently announced its second exit from its India portfolio with the acquisition of Netmeds by Reliance Industries Limited. In 2019 it had exited gift card platform Qwikcilver, which was acquired by Pine Labs for $110 million.

Apart from these, the fund has backed cloud kitchen company Rebel Foods, online wellness platform Healthifyme, meat delivery company Licious, digital lending companies Kissht and Lendingkart, data-centric security company Seclore and others. 

With a fund life of eight years, Kapoor expects more exits only in 2024-25. “We have budgeted these (portfolio) companies for the next four to five years atleast before they get to exit,” he says, adding that the portfolio has seen a mixed bag of impact due to the Covid-19 pandemic and national lockdown which was imposed in March.

“Companies like Healthifyme and Licious have seen strong tailwinds from Covid-19 and orders increased by 3x. On the other hand we have some business in fintech which got impacted and have started disbursing again,” he said. 

In order to cut losses, the firm has split companies being evaluated into three sectors -- Covid-19 beneficiaries, Covid-19 impacted companies and sectors which have decimated due to the pandemic. Kapoor said that Sistema Asia Capital’s strategy for each bucket would be different. 

“Covid beneficiaries such as edtech, health tech and online entertainment have seen strong tailwinds and the valuations may be higher but it might be a good time to bet on this. For the Covid-impacted companies, there might be some bargains on valuations and we will look at them cautiously. As for the last bucket where sectors such as CRM and travel have seen a fall in business, we will see how the sector reorients itself before taking a call on investments,” he said.