Steadview Capital has invested $85 million, through a secondary transaction, in SaaS major Freshworks, as it bulks up its India portfolio with yet another unicorn, Ravi Mehta, managing director of the London-based firm, told ET.
The transaction, which closed in January this year, saw Steadview Capital make its ninth investment in an Indian privately-held technology company, which is valued at more than $1 billion. It already counts the likes of ride-hailing app Ola, online insurance aggregator PolicyBazaar, omnichannel beauty retailer Nykaa and eyewear solutions firm Lenskart among its portfolio.
In November, Chennai and San Mateo-based Freshworks had announced that it had raised $150 million in a new round of financing led by its existing investors, which valued it at about $3.5 billion. The secondary transaction by Steadview Capital involved buying out some of Freshworks’ early angel investors.
In an exclusive interview with ET, Mehta said that the investment firm, which has pumped over $500 million into 20 Indian private tech companies over the last two years, will continue placing bets at the same pace in Asia’s third-largest economy, and may even increase the same over the next two years.
“Overall, Steadview has $2 billion invested in India including both private and public companies and is very excited about the opportunities in the country,” Mehta told ET.
The firm, which manages assets over $2.5 billion globally, has been one of the most active tech-focused investors in India in the recent past, having invested an estimated $1.2 billion till date, making India the largest recipient of its capital.
Steadview’s core thesis has been to invest in fast-growing companies with a market cap in the range of $100 million-$1 billion, which are either market leaders or oligopolies in their respective sectors, and with the ability to write a first investment cheque of up to $100 million.
“We also view Covid-19 as an opportunity to back our companies more strongly. We have added to three of our portfolio companies recently – Nykaa, Chargebee and Observe.ai. At the beginning of the year, we had made an investment in Freshworks. So, we have been fairly active through this period as well,” Mehta said.
This comes at a time when investors, across stages and sectors, have largely slowed their activity, as they wait for the economy to recover from the Covid-19 pandemic and the nationwide-enforced lockdown.
Mehta, a computer science graduate from Harvard University, said the firm, which shot into prominence after it wrote a $100 million cheque to Flipkart in 2015, would look to double down on certain sectors, such as SaaS, ed-tech and gaming, which, due to Covid-19, have benefited from a combination of faster technology adoption and greater internet penetration.
“Part of the reason why we are optimistic is, if one were to look at China and the US, growth across internet and software has accelerated. In some sub-sectors such as gaming, online education, and ecommerce, penetration rates that would have been achieved in 2025 will be achieved this year. India is not any different,” Mehta said.
Mehta, who prior to launching Steadview, used to cover Asia for US-based hedge fund Maverick Capital, expects to start recording exits, primarily through the IPO route, starting next year.
“My sense is that, with regard to our current portfolio, we expect to see at least 6-7 IPOs over the next 2- 3 years. The first of our private company IPOs will likely occur in early 2021 and then we expect a portfolio company will be going public every three to four months or so thereafter,” Mehta said.
“With our ability to invest in both public and private equity, we expect to continue to support our portfolio companies at the IPOs as well as in the public markets,” he added.