IDG Ventures launches programme to invest in 15-25 start-ups by the end of December at a time when its peers have slowed down.
Bengaluru: Venture capital firm IDG Ventures India Ltd has launched a programme to find and invest in new consumer-facing Internet start-ups, as the VC firm seeks to increase its focus on such investments at a time when some of its peers have slowed down.
Through the programme, Digital Consumer Innovators Program, IDG will invest in 15 to 25 start-ups by the end of December. The company is looking at mobile-first shopping apps, digital media start-ups, software providers for Internet companies and others.
IDG will invest $500,000 to $1 million in early-stage deals as well as $3-$5 million in Series A deals, said Karan Mohla, head of consumer Internet investments at IDG Ventures.
The VC firm started inviting applications from start-ups last week in Delhi and Bengaluru. The programme will expand to other cities later this year.
Apart from providing funds, IDG will help the selected start-ups to hire and flesh out their strategies.
The start-ups will have access to IDG’s advisory panel that includes Mukesh Bansal, founder and ex-chief executive of online fashion retailer Myntra; former Tata Group chairman Ratan Tata; and Infosys Ltd co-founder Kris Gopalakrishnan.
“This is the perfect time to step up our investments in digital Internet start-ups,” IDG Ventures India chairman Sudhir Sethi said in an interview.
“The quality of entrepreneurs has gone up significantly; entrepreneurs are coming up with more differentiated business ideas than last year and the market is booming. Additionally, valuations across stages have gone down relative to last year, and with our new fund, we are well placed to take advantage of this opportunity,” Sethi added.
IDG Ventures’s start-up programme is similar to those launched by others. Kalaari Capital launched a start-up accelerator called Kstart in February, by earmarking $20 million for the programme over the next two years.
If marketed well, these programmes will help VC firms assess many start-ups in a short span of time and strengthen their brands as investors within the start-up world.
In February, IDG said in a filing with the US market regulator Securities and Exchange Commission that it will raise its third fund of $200 million. IDG, whose portfolio includes Flipkart Ltd, Lenskart, Firstcry and Zivame, expects to invest in about 45 start-ups from this fund over the next three years, Sethi said.
IDG’s fund raising comes after many of India’s other VC firms, including Kalaari, Accel Partners and Nexus Venture Partners, launched new funds last year.
In all, VC firms ploughed in more than $9 billion into Indian start-ups since the start of 2014, betting on the idea that a fast- expanding Internet customer base will fuel a boom in online shopping.
But heavy losses piled up by start-ups, slowing sales growth, and global macroeconomic factors, such as a growth slowdown in China, have prompted investors to pull back since late last year.
India’s most valuable e-commerce firm Flipkart has been hit by valuation markdowns by four of its investors, and analysts have also questioned the value of other unicorns like Zomato.
“Over the past eight years or so, we have backed many winners, such as Myntra, Flipkart, Firstcry, Lenskart and others. Given the sheer increase in the number of entrepreneurs and start-ups, we have stepped up our speed of investing to keep finding winners,” said Sethi.