BlincInvest, the Mumbai-based venture capital firm, started with investing in four companies. It has since then introduced its SEBI-registered funds with a fund size of Rs 100 crore with an aim to support those fintech and edtech companies with management teams, reasonable traction with market validation, and market opportunities. Through their investee companies, BlinC aims to impact 5 million learners and 10 million users in the EdTech and FinTech sectors respectively.
RK Rangan, Director and Chairman, BLinC Invest spoke to Sulekha Nair about the Fund and its future goals, the record funding rounds some startups have been able to garner and offered a few tips on how startups can go about seeking funding.
Excerpts from an email interview
In the recent past, there have been record funding rounds in which companies like CRED, Acko, Groww and BYJU’s have raised over $250 million each. This year we have had over 30 new startups enter the Unicorn club so far. What do you think will be the impact on the Indian startup funding ecosystem?
India has emerged as the top global destination for investments in start-ups. Over 16,000 startups were recognized in 2020-2021, out of which 178 startups received early-stage funding in 2020. The increase in the number of startups joining the Unicorn club in India is a testimony to the fact that Indian startups are flourishing owing to innovation and the incorporation of advanced technology.
India is becoming the world’s fastest-growing startup ecosystem with over 60 unicorn startups as of now in October. This indicates an upsurge in businesses across sectors, leading to a win-win situation for companies and investors alike. The bullish trend across sectors will motivate startups (existing and new) to become more innovative and create more sustainable business models that will lead to a lucrative funding ecosystem for startups and investors alike.
Given your expertise in fintech and startup ecosystem, how do you perceive the changes brought about by the pandemic in the way investors evaluate and further invest in startups?
Enhanced evaluation and further investments in start-ups in online business models, particularly in fintech and edtech is a phenomenon that kicked off during the pandemic. The acceleration of investments in online business models, in turn, promoted innovations among startups to amplify their digital presence and develop a friendly ecosystem for a better user experience.
The customers’ needs and demands amid the pandemic have also created enormous market opportunities, which may be seized by developing a robust business model that thrives even in the post-pandemic world. The investor's interest in such models is a confidence booster for stakeholders to improvise on their business ideas to secure investor attention. Moreover, investors are keenly observing the ability of promoters to steer the business through pandemic cycles as a criterion for investments.
You were the key member of the global committees of global financial services organization which focused on transformation and FinTech adoption. Would you like to shed some light on the booming fintech ecosystem in India?
Driven by the innovation of business models, I believe the fintech industry is expected to grow multifold in the forthcoming years. We can also expect some of the big names in fintech to tap into the capital markets and invest in Initial Public Offering (IPO). Fintech, being a diverse sector, has a potential for significant growth across various segments, including InsurTech, wealth management, neobanks, risk management, and regtech, besides already booming business in payments and lending space.The emergence of fintech as collaborators (not competitors) to the conventional financial institutions is facilitating the free flow of credit to business owners in all strata of society.
How many startups have BLinC Invest invested in so far? What are the considerations before investing? Any recent funding (if any)?
With a co-founder approach, making investments in EdTech and FinTech sectors is our niche, and we intend to expand our investments in these sectors in the forthcoming months. To provide such investments, we have recently launched the BLinC Fund II (a SEBI-registered Rs100 Cr fund) and have made the first investment in an InsurTech company named Vital.
How have the returns been? Have you raised larger funds over the years? What are your future investment plans?
Since our inception, we have been on the receiving end of good returns, recording an overall return of 4.5x with an Internal Rate of Return (IRR) of 40 percent on our first portfolio. Our task at hand is fundraising for BLinC Fund II, which has achieved its first close with IRs 30 crore. Based on our current momentum, we expect to achieve the final closing of our fund by the end of this year. Speaking of the future, we intend to keep raising small funds to build concentrated portfolios and target an IRR above 30 percent at all times.
What advice would you give to early-stage startups seeking funding?
Considering the boom in businesses across different sectors, it’s now a good time for startups to identify market opportunities and devise customer-centric solutions. For early-stage startups to attract funding, they must highlight their USP, scale their potential with time, and target realistic fundraising goals.
Shortlisting investors whose investment thesis is aligned with the company's business model and vision could be one of the initial steps on the road to acquiring seed investments. Here, the investors’ social media pages or websites shall help get insights into their investment strategy and thesis. Lastly, startups should lay out their short and long-term product strategies and place a solid team of expert professionals to consider the expansion and scalability of businesses before pitching to investors.
