Ola and Razorpay-backer Matrix Partners India have announced the close of its fourth fund with a corpus of $550 million as against the initial plan of raising $450 million to invest in early-stage startups in India.
This is Matrix’s largest India-dedicated fund till date. In 2006, the firm had raised about $300 million for its first India fund. In 2011, it set up Fund-II with commitments worth nearly $250 million, which was expanded with a top-up. Fund-III came into being with a corpus of $300 million in 2019. Now, with the latest $550 million Fund-IV, total funds raised stands at over $1.3 billion across four funds.
With the new fund, Matrix Partners India will continue to back founders that are building category-defining companies, the firm told CNBC-TV18 in a statement.
“The firm will continue to focus on seed, early and early growth stages across sectors and has already been investing from the new fund,” it added.
Established in 2006 as the India arm of the U.S-based Matrix Partners, the investment firm has invested across a variety of sectors including ConsumerTech, B2B Commerce, Enterprise, and Fintech, among others. Overall, it has backed over 100 new-age tech companies in India with assets under management of over $1.5 billion.
The unicorns in Matrix Partners India’s portfolio include Ola, Ola Electric, RazorPay, DailyHunt, OfBusiness, DealShare, Oxyzo and OneCard. Last November, the firm saw its lending unicorn on the Five Star Business Finance list on the stock exchanges.
The announcement of Matrix Partners India Fund-IV follows a series of global venture capital firms setting up their largest-ever India-dedicated funds. Sequoia Capital has set aside $2 billion for investments in India. Others include WestBridge Capital ($1.5 billion), Elevation Capital ($650 million) and Lightspeed ($500 million).
Rapid fundraising since the turn of 2022—after an exhausting, record-breaking 2021—has led to the accumulation of at least $10-15 billion worth of India-dedicated dry powder.
However, venture capital investors aren’t in a hurry to loosen their purse strings yet, as the global economy took a turn for the worse last year, with high interest rates in the U.S. to beat inflation and a war between Ukraine and Russia on the other side of the Atlantic.
The resulting tech rout and caution on the part of investors have led to a funding winter globally. In April, VC investments in Indian startups slumped to $340 million — a 28-month low. That’s after funding fell nearly 40 percent to $24 billion in 2022 from a record $35 billion in 2021, as per data from Venture Intelligence.
Matrix Partners India has been cautious too. Deals made by the firm dropped from about 40 in 2021 to 30 in 2022. So far this year, the firm has only invested in three startups — Toddle (edTech SaaS), Park+ (super app for car owners) and clean-label food brand The Whole Truth (clean-label food brand).
The firm is yet to disclose the average ticket size of investments or the number of startups it seeks to back out of the new fund.
First Published: May 25, 2023 6:29 AM IST
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