Matrix India announces $300 Mn Fund III; sharp focus on consumer segment

Backer of Indian startups like Ola, Quikr, Practo, DailyNinja among others, Matrix Partners India has announced their third fund after more than 2.5 years of announcing the last fund extension.

The Matrix India Fund - III has been closed at $300 million. The VC plans on deploying this fund via a yearly rate of 12-14 deals, and seed rounds will be preferred over Series A and B for the same.

While there are no concrete plans for the fund deployment, apart from the deal numbers and stage of the funding round, the company’s preferred segment is consumer focussed startups.

The specific interest in this segment comes from the firm's desire to invest in companies that can generate their own money via the sale of products and services instead of relying on the advertising-led model.

As per an interview with ET, the firm explains the logic behind going after the consumer space by elaborating how the advertising-based revenue model remains the popular choice among companies due to the hesitation against paying amongst the Indian population.

The reason behind this remains the $2,000 GDP per capita, entailing that India is at the subsistence level.

The company expects the Indian economy to grow substantially, considering the boost in the internet technology segment, and the GDP per capita to increase to $2,500-$2,600. With this, the citizens are expected to have a larger disposable income, and a boom in the consumer focussed startups.

The VC with a portfolio of above 60 companies, last raised an extension round of $100 million two years ago and is expected to have $1 billion worth assets under management with the latest fund close.

The US-headquartered VC understands how the Indian economy is quite different from the US and closer to the Chinese economy, and even there lacks the per capita income to create a successful market for the startups.

It will be interesting to see how the portfolio of this company develops in the upcoming year.

Looking at the larger picture in Venture Capital industry, new funds and VCs are being announced at a fast pace due to the increase in exits (through M &A) and secondary share sale events in the ecosystem.

With VCs and Angels finally being able to make money, the industry is seeing a boost in the number of partners, as well as more people are opening up their own funds to invest back in the system.

In the past year, several HNIs like Flipkart's Bansals, Partners at large funds like Sequoia Capital, Helion Ventures have left their respective companies and created their own investment avenues like 021 Ventures, A91 Ventures etc.

Several old VCs have announced new funds like Iron Pillar, Sixth Sense Ventures, Blume Ventures, Alteria Capital among others.