Kae Capital

Funds managed

Fund nameAsset ClassLicense
Kae Capital Fund IIVC/ Early stageSEBI AIF Cat 1

About the AMC

  • Sasha Mirchandani is Managing Director and Founder of Kae Capital and Co-founder Mumbai Angels. Previously, he was at Blue Run Ventures as Managing Director for the India operations.
  • Before joining Blue Run Ventures he was CEO and Founder of Imercius Technologies. Earlier he was at Mirc Electronics (Onida) where he was Head of Corporate Affairs and new business.

Investment Philosophy (for firm)

A destination for early stage companies to acquire capital for growth. Kae Capital is a sector agnostic fund and invests in companies which bring about innovative solutions for the existing gaps in the markets, backed by a great team. Our focus – investing in Innovation, Leadership and Growth.

We bring in the expertise of identifying and building large companies even from a concept. Our team at Kae Capital has a wide range of experience in helping companies grow, fill gaps in the market and help create winning companies.

Media

Title: Kae Capital to raise ₹100 crore funds to back portfolio companies, Source: live mint, Date: 21 January 2019

https://www.livemint.com/companies/start-ups/kae-capital-to-raise-100-crore-fund-to-back-portfolio-companies-1548004294658.html

  • Kae has fully deployed its first fund of $25 million raised in 2012
  • Before starting Kae Capital, Mirchandani had invested in his personal capacity in companies such as Myntra
  • Early stage investor Kae Capital is raising a ₹100 crore add-on fund to invest in portfolio companies of its first fund, founder and managing director Sasha Mirchandani said.
  • Kae has fully deployed its first fund of $25 million raised in 2012. Its second fund of $53 million which was raised in 2017 and backed by Small Industries Development Bank of India, MakeMyTrip founder Deep Kalra and Infosys co-founder Kris Gopalakrishnan and others, has exhausted about 70% of the capital.
  • “We have run out of money to back our Fund 1 companies, and are thus raising this fund. We will selectively invest in the best companies from our portfolio,” Mirchandani said in an interview.
  • “We have seen these entrepreneurs go through ups and downs and bounce back strongly each time and would want to continue supporting them through their journey in building world class companies,” he added.
  • Kae’s second fund has invested in Hiver, a shared inbox management solution, and hard liquor firm Boutique Spirit Brands, among others. Its other investments include wellness products retailer Healthkart, online medicine delivery startup 1mg and Loantap, which lends to salaried employees.
  • The average ticket size of investments from the add-on fund should be ₹8-10 crore, Mirchandani said. The fund has already made two investments so far. The add-on fund is sponsored by wealth management firm IIFL, which will help Kae market the fund.
  • Mirchandani expects to close the fundraise by end of the current fiscal year. The fund’s limited partners, or investors, will be mostly high networth individuals who have not invested in Kae’s earlier funds, and a few old investors as well.
  • Before starting Kae Capital, Mirchandani had invested in his personal capacity in companies such as Myntra, the fashion portal sold to Flipkart in 2014, ad-tech company InMobi and data analytics firm Fractal Analytics, which raised $200 million in its last funding round in earlier this month from private equity firm Apax Partners. Mirchandani is among India’s earliest and prominent venture capital investors, and founded Mumbai Angels, a network of investors in early-stage companies.
  • Kae is sector-agnostic and makes early-stage bets, usually at the seed stage with follow-on rounds across mobile, e-commerce, consumer internet, education and healthcare sectors. While its earlier cheque sizes used to be about $700,000-800,000, as the startup ecosystem has matured and quality of founders has increased, its average cheque size now is $1 million.
  • Mint reported on 9 October that seed-stage deal sizes have increased 25% year-on-year to $880,000 in 2018, according to data sourced from Tracxn Technologies.
  • The trend reflects maturity in the ecosystem, cost increases and increased faith in founders, according to investors.
  • “The ecosystem is far more mature, with investors recognizing great founders and realizing that great founders also need bigger investments,” said Anup Jain, managing partner, Orios Venture Partners, an early-stage investor. “The demand for good quality technology is very high and the supply is not keeping up, leading to higher costs.”
  • Investors have become more cautious after burning their fingers with investments not paying off earlier, thus the fewer number of seed deals, although bigger deal sizes said Sanjay Nath, managing partner at early-stage investor Blume Ventures.

Title: Desi funders form collective to take on foreign investors, Source: Economictimes, Date: 10 June 2019

https://tech.economictimes.indiatimes.com/news/startups/indias-top-investment-firms-come-together-to-take-on-foreign-investors/69716020

Funder’s Forum, which is being registered as a trust, has the likes of Chiratae Ventures, Kae Capital, YourNest Venture Capital and Stellaris Ventures Partners, all leading early-to-mid-stage domestic venture capital firms as part of its founding advisory teams A number of India’s top home-grown investment firms, which cumulatively manage close to $800 million in assets, have come together to form a collective to take on foreign investors, and as well as to act as an advocacy platform.

Funder’s Forum, which is being registered as a trust, has the likes of Chiratae Ventures, Kae Capital, YourNest Venture Capital and Stellaris Ventures Partners, all leading early-to-mid-stage domestic venture capital firms as part of its founding advisory teams, and all of which compete with the likes of marquee Silicon Valley-based investors, such as Sequoia Capital and Accel Partners in India’s fast-growing startup ecosystem.

“We felt that we should get a lot more support from the government, given that the domestic funds look at opportunities in India very differently, as opposed to the global funds,” Mahendra Swarup, founder of Venture Gurukool, and a founding member of Funder’s Forum, told ET.

“Under the 2:20 fund structure, smaller funds aren’t a very viable proposition. The fee structure is so small that it is difficult to hire a good team. The disadvantage is that deal sourcing tends to suffer.” Swarup added.

The forming of Funder’s Forum follows that of IndiaTech, the advocacy platform founded by startup stalwarts Sachin Bansal, Ola founder Bhavish Aggarwal and MakeMyTrip Group CEO Deep Kalra, and which was formed to solely promote the interests of domestic consumer internet giants over their global peers.

The development also comes even as the likes of Y Combinator, the famous Valley-based incubator, which is behind the likes of Airbnb and Stripe, have been reported to have picked a record 15 startups for its summer batch of 2019, a massive jump from its previous record of selecting four-to five startups fro Asia’s third-largest economy.

Separately, in January earlier this year, Sequoia Capital launched its accelerator programme – Surge – across India and in South East Asia, in the process, bringing on board former Google India Head Rajan Anandan to lead the same.

Members of Funder’s Forum will pool their resources, and have a common deal flow, thereby leading to larger cheques being written. The strategy mimics that of existing angel networks, such as Indian Angel Network, which work on a similar proposition.

“This will allow the Funder’s Forum collective to lead a round, which they aren’t able to, in many cases, do today,” Swarup said.

The collective will also be engaging with policymakers, such as Reserve Bank of India and Securities and Exchange Board of India, among others.

“India has only two or three domestic institutional LPs, unlike in the west…One of the biggest needs for domestic funds is capital. That becomes paramount. This is an advocacy platform for domestic funds,” Rahul Chowdhri of Stellaris Venture Partners, said.

Apart from ensuring a greater number of domestic institutions back home grown funds, the Funder’s Forum will also look to engage on ensuring better tax treatments for the same. Also on the cards is ensuring that the current restriction of 35% of a total corpus coming from government organisations be relaxed.

“It’s still early days. Some conversations have started… The idea is to bring it to the attention of policy makers as we move forward,” Chowdhri said.

Title: Boutique Spirit Brands raises $1 million funding from Kae Capital, Source: Economic Times, Date: 02 August 2018

https://tech.economictimes.indiatimes.com/news/startups/boutique-spirit-brands-raises-1-million-funding-from-kae-capital/65244361

Bira’s success has prompted investors to look at the alcohol beverage space closely with Kae Capital investing about Rs 6.8 crore in hard liquor firm BSB which sells rum and brandy under the brand names of Gladius and Zeus.

India’s consumer brand story is increasingly sought after by technology-focussed investors with specific interest riding in the alcohol beverage space.

Bira’s success has prompted investors to look at the alcohol beverage space closely with Kae Capital investing about Rs 6.8 crore ($1 million) in hard liquor firm Boutique Spirit Brands (BSB) which sells rum and brandy under the brand names of Gladius and Zeus respectively in Orissa and Andhra Pradesh.

One of the very few hard liquor brands to have received capital from institutional investors, BSB closed FY18 with over ?18 crore in revenues selling just across two markets and is targetting gross revenues of about ?80 crore by FY19 as it also looks to widen its playground and portfolio.

“We are now looking to launch a whiskey brand as also expand the sale of rum and brandy to eight and four states respectively. We want to have presence across all categories and hence will look at launching a vodka brand in the long term as well,” said Rahul Gagerna, Founder of BSB, formerly the head of marketing at distilleries firm Radico Khaitan.


The company sold 50,000 cases across rum and brandy in FY18 and is looking to sell over 2 lakh cases by FY19.

“Given that liquor is a matter of state jurisdictions and the operational complexity in business, we wanted to back a team that has navigated this in the past. The cofounding team has several decades of liquor experience coupled with strong traction of brands such as Gladius and Zeus made a compelling case for us to invest,” said Navin Honagudi, Managing Director at Kae Capital.

BSB is also in talks with multiple investors to raise upto Rs 14 crore in debt financing as it looks to establish considerable retail presence across the hotel and restaurant segment to establish the brand.

Investments in challenger brands in the consumer space have been raking up significant interest with venture capital funds investing about $575 million in the space until June as per data collated by News Corp VCCEdge. This is significantly higher than $516 million invested in the space all through 2017.

Title: ShareChat acquires Kae Capital-backed meme-sharing app Memer, Source: Economic Times, Date: 27 April 2020

https://economictimes.indiatimes.com/tech/internet/sharechat-acquires-kae-capital-backed-meme-sharing-app-memer/articleshow/75409607.cms?from=mdr

“We are looking for inorganic opportunities to complement our organic efforts and power the growth engine. We are on active lookout for start-ups that complement our product capabilities and share the vision of serving diverse content and social needs of Indian masses.

MUMBAI: ShareChat, the Indic language social media platform, has acquired Kar Capital-backed meme-sharing and discovery platform Memer.

The platform had gained popularity in the regional markets, mainly among young audiences since its inception. Post-acquisition, Memer’s product suite will be integrated into ShareChat.

“We are looking for inorganic opportunities to complement our organic efforts and power the growth engine. We are on active lookout for start-ups that complement our product capabilities and share the vision of serving diverse content and social needs of Indian masses. Memer happens to be the first step towards this approach,” said Manohar Charan, VP – Corporate Development and Strategic Finance, ShareChat.

The company said that Memer complements ShareChat’s product set and will help provide more power in the hand of creators on the platform.

Memer was founded in 2018 by three IITians – Amit Singh, Chetan Dalal and Chandramauli Singh, and was funded by Kae Capital. In the last two years, over a million original content pieces have been created on the platform.

“We had backed the Memer team when it was at an idea stage. Over time, they worked on multiple products to solve for content creation. Memer was their fourth product in the same direction. The team has built a unique understanding of community building and content creation through their multiple product iterations over the last two years. We wish all the best to the Memer and ShareChat team in their growth journey,” said Navin Honagudi, MD, Kae Capital.

Title: Moneyball: Kae Capital’s Navin Honagudi Wants To See More Companies That’re Ahead Of The Curve, Source: inc42, Date: 10 July 2018

https://inc42.com/features/moneyball-kae-capitals-navin-honagudi-wants-to-see-more-companies-thatre-ahead-of-the-curve/

Navin Honagudi Of Kae Capital Will Back Startups With The Right Product-Market Fit For The Next 500 Mn Consumers

Navin Honagudi, the managing director of Kae Capital, is aiming at the next 500 Mn Internet users who are set to emerge from India as it is in line with the venture capitalist’s philosophy of backing strong entrepreneurs who can cater to the needs of consumers in large markets.

Kae Capital has raised over $78 Mn since it launched six years ago and is sector agnostic. It picks startups from areas as varied as consumer Internet, marketplaces, fintech, logistics, healthcare, and SaaS-enabled business.

Navin says the Kae Capital fund prefers to enter a startup at a time when it has the product-market fit established and is looking to raise the first institutional capital to scale up the business.

Navin also sees an inflection point in the current landscape when it comes to how VCs are perceived in India. He says people are increasingly now understanding the need for venture capital and for creating strong brands and large companies in a relatively shorter period of time.

Some of the active investments pf Kae Capital include Porter, which got an investment of INR 65 Cr from Mahindra and Mahindra as part of a merger agreement; Fynd, which is just the second direct investment made by Google for Indian startup; 1MG; and Healthkart. Navin earlier invested in startups such as Greendust; Inmobi, the first Indian startup to turn unicorn; and Myntra.

Navin has previously worked at Reliance Ventures for over three years and led the investment in Paytm. At Kae, he oversaw seed investments in Numberz, a cash flow management platform; dating App TrulyMadly; intra-city logistics mobile app Porter; and pre-owned car marketplace Truebil.

Inc42: What is your investment thesis?

Navin Honagudi: We focus on backing strong entrepreneurs who are focussing on solving a problem in large markets. For us, the target addressable market needs to be large. We focus on technology, both in B2C and B2B. Within B2C, our focus areas are consumer internet, marketplaces, fintech, logistics, healthcare (where there is a large consumer angle). In B2B, it is largely a SaaS-enabled business. We come (in) at a stage where hopefully the product-market fit is established and the company is looking to raise the first institutional capital to scale up the business. Both the sectors are of equal focus.

Inc42: So at what stage do you come in?

Navin Honagudi: We prefer to be the first institutional investor in the company, so you could think of us coming in during the angel round or seed or Series A.

Inc42: Do you not look at investing in the latter growth stages?

Navin Honagudi: We do that only with our portfolio companies as part of a larger consortium.

Inc42: What is your average ticket size and the stakes that you try to take in startups?

Navin Honagudi: Some of it is flexible, but on a median basis we do between $500k and $800k as the first cheque and the typical stakes we look at are in the 20%-25% range. We have invested in about 50 companies so far.

Inc42: What trend do you see emerging from within your portfolio companies?

Navin Honagudi: We look at identifying strong entrepreneurs and throwing them at tough problems in large markets. When we invested in Porter, we saw that the problem being solved was that of logistics in the intra-city market. It was a large enough problem to be cracked as there was nobody operating in that space and there was a problem to be solved. Similarly, in the pre-owned car marketplace, we have a portfolio company called Truebil.

Inc42: What are the opportunities you see emerging in the Indian startup ecosystem?

Navin Honagudi: We will continue to focus on healthtech, consumer internet, with a strong focus on creating a product targeted at the next 500 Mn users in India and also on consumer brands.

Inc42: Any updates on investments from your Fund 2?

Navin Honagudi: We have invested in a few consumer brands like Timla Foods, which runs a snacks brand called Popicorn; we have invested in a nutraceutical startup. We have made two other investments recently in the consumer brands space that are still unannounced and we’re going spend close to 20% of the fund on non-tech consumer companies. We currently have a good amount of capital to be deployed from Fund 2. Fund One is completely employed.

Inc42: Has there been a change in how VCs are perceived in India?

Navin Honagudi: The inflection point in India is finally happening — people now understand the need for venture capital and for creating strong brands and large companies in a relatively short period of time. So, essentially what venture capital does is that it helps you to form a strong brand in a period of four-five years, while understanding that the company is going bleed and not be profitable, but at the same time help it get there and then move to profitability.

Companies that are today unicorns of the ecosystem are the ones that were previously bleeding for five-six years before turning profitable and now are growing in a more sustainable manner. I think people have taken note of this and appreciated it. So, I think it is a very healthy situation today in the venture capital ecosystem where people not only inside but outside view this asset class very favourably and far more such asset classes (are likely) to emerge.

Inc42: How has your approach evolved over the years?

Navin Honagudi: Our first fund was $25 Mn and the current fund is double that, so clearly, the ticket size and investment amount has doubled from Fund 1 to Fund 2. When you talk about investing a large amount of capital in the same company, it is essential that you would want the company to have proven a few more things. We are absolutely fine taking risks around execution, markets, and so on, but since the fund has evolved, we would like to see companies that are slightly ahead of the curve rather than a pure business plan kind of investing.

Inc42: Way do you mean by ahead of the curve?

Navin Honagudi: I was referring to the maturity of the company when I mentioned that, so it may not be a company with just a business plan (we have backed companies with only business plans in the past), but probably we will be looking at a company that is closer to a product-market fit.

Inc42:  What advice would you give to entrepreneurs looking to pitch?

Navin Honagudi: Focus on basics, think about the problem you’re looking to solve, and on gathering insights that only you have and that the competition does not.

Inc42: What are some mistakes entrepreneurs make while pitching to investors?

Navin Honagudi: Going all over the place, talking about solving three-four different problems, thinking of three-four different streams, rather than focusing on one.

Inc42: What is anti-portfolio for you?

Navin Honagudi: OYO. We met Ritesh (Agarwal, founder of OYO) in the middle or towards the end of 2013, but we couldn’t build conviction on the problem statement and, hence, we did not invest. We also missed out on investing in Delhivery in early 2012.

Inc42: What has been the takeaway from these anti-portfolios?

Navin Honagudi: The learning has been to not worry too much about the market size in the beginning. If you look at when Flipkart would have started out, the marketplace would have been small. Think through on the how the market will pan out in the next five years, especially with India adding on to the next 20 Mn transacting customers [and 20 Bn Internet users.]

Inc42: What is your average day like?

Navin Honagudi: I am a morning person; I start work at 8:15-8:30 am, and spend weekends with my family. I shifted to Bengaluru just a couple of weeks ago as part of a move focussed on building the capabilities of Kae Capital in the city.

Inc42: Are most of your portfolio companies Bengaluru based?

Navin Honagudi: No, it’s a mix of Bengaluru and Delhi, largely, with some in Mumbai, Pune, Chennai, and Jaipur.

Inc42: What are some of the challenges that you face in your line of work?

Navin Honagudi: We live and breathe within the companies that we invest in, so the challenges that they face are the ones we also face. Largely, it could be in terms of hiring the right set of people and getting the consumer acquisition cost low.

Title: Series A funding will not come unless startups achieve a certain milestone, Source: YouTube, Date: 06 September 2013

https://www.youtube.com/watch?v=aY7hT6URnvk

There is a concern among Indian startups that there is a huge Series A crunch in the country. Entrepreneurs often complain that while it is easy to get angel/seed funding, it is hard to secure Series A due to curious reasons. However, leading investors such as Karthik Reddy and Manish Dalal feel that Series A funding will happen only if a startup has some customer validation and revenues to show. They say entrepreneurs should focus on building great products without the help of VC funding which will automatically come when companies achieve certain milestones. In a panel discussion on ‘Series A Crunch: How Are Entrepreneurs & Investors Managing?’ at Indian Angel Summit 2013 organised by VCCircle, Karthik Reddy of Blume Ventures, Manish Dalal of Mumbai Angels and Sasha Mirchandani of Kae Capital discuss what Indian startups can do to get Series A funding to further support their growth.

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