Kalaari Capital

Funds managed

Fund name	Asset Class	License
Kalaari Capital Partners India IV	PE/VC	SEBI AIF Cat 2
Kalaari Capital Partners India Opportunities Fund	PE/VC	SEBI AIF Cat 2

About the AMC

• Founded in 2011 by Vani Kola. Kalaari Capital is both PE and VC. It manages $650 million (AUM) funds with a strong advisory team in Bangalore investing in early stage, technology- oriented companies in India.
• Kalaari Capital was re-branded from Indo US Venture Partners (IUVP). The rebranding comes as US-based New Enterprise Associates (NEA), which the team had partnered for the first fund (which was called NEA IndoUS Venture Partners), is not associated with the second fund. NEA had partnered with the first fund as it did not have a direct presence in India, but has since set up offices in the country. Another change is that Vinod Dham, who had led the first fund and is well-known for developing Intel’s Pentium microprocessor, will not be involved in the new fund. “IUVP will continue to function as it is and will be working with the companies it has already invested in. IUVP had invested over a $100 million in 35 companies in the last five year
  
• Kalaari Capital has made 163 investments. Their most recent investment was on May 21, 2020, when Vakilsearch raised.
  It has also started a seed programme, called Kstart, in February 2016.
  
• Key staff-
  • Vani Kola, Founder and MD at Kalaari Capital, prior work experience- MD at IndoUS Venture Partners, CEO at Certus Software. Holds master’s degree from Arizona State University
    
  • Rajesh Raju, MD at Kalaari Capital. He currently serves on the boards of several companies. Rajesh has an MBA (Hons) from the Booth School of Business, University of Chicago, a master’s in engineering from Marquette University and bachelor’s in engineering from BITS, Pilani.

Sources –
https://www.crunchbase.com/organization/kalaari-capital#section-investments
https://yourstory.com/2019/10/hackathon-developers-kalaari-capital-kstart-startups
https://www.vccircle.com/indous-venture-rebrands-kalaari-capital-closes-150m-fund

Investment Philosophy (for firm)

“We prefer to be the first institutional capital for founders. We build conviction on founder’s vision and set off on a journey together to build transformative companies and enduring brands. We have been fortunate to work with many visionary entrepreneurs with the courage to re-imagine the world.”

Sectors covered – consumer tech, enterprise tech, fintech, healthtech, supply chain and logistics.

Kumar Shiralagi, managing director at Kalaari noted, “We have been attracted to invest in technology companies always and would continue to do so. Whether it be software products and services, e-commerce, mobile and telecom Services, education, healthcare, media and clean tech—all are hot sectors within technology.”

However, Vani said “the company might look at some emerging sectors also apart from technology. This part of the strategy is reflective by its early bets on pharma chain MedPlus Healthcare (where it netted a healthy exit) and e-waste recycling firm Attero.”

IUVP and Kalaari both believe in investing in early-stage companies. “In the time of slowdown, only entrepreneurs who have a long-term plan would think of a start up and we want to back them with enough funding.” Vani said.

“We are passionate about investing in entrepreurs who are poised to be tomorrow’s global leaders. We seek companies that are capturing new markets, providing innovative solutions, creating new wealth for India and beyond”.

On Kalaari’s investment strategy, Kumar Shiralagi, MD said, “We strongly believe in the potential of early stage investing in India and will remain focused on early-stage investments across a wide spectrum of sectors that capture the India growth story.”

“Kalaari’s key criteria for an investment are an innovative business model, market leadership, market size, product advantage, domain expertise, management characteristics and an entrepreneurial spirit.”

On the LP front, the Kalaari is optimistic. Most of the LPs for IUVP and Kalaari are from North America. “The successful closure of the $150 million fund despite the current economic environment is a testament to the quality of our portfolio to date as well as the continuing conviction of LPs in our team,” Vani said.

Kalaari Capital Partners II, which has backed companies including Hands Free Networks, Lapis, Magzter, Mettl, Simplilearn and Urban Ladder, Vyome and Zivame, is actively considering various other investment opportunities.

https://inc42.com/datalab/5-venture-capital-firms-from-bengaluru-that-made-it-big-in-2018/

It usually invests $2m – $5m in technology-savvy companies and technology-enabled services for India and the global markets. So far, it has floated three venture capital funds and is reportedly in the process of launching the fourth fund, which is expected to be worth $200 Mn.

• Kstart (https://kstart.in/about-us/)
• Kstart is a unique seed program designed for the next generation of Indian entrepreneurs.
• At Kstart, our investment philosophy rests on four pillars – quality of the founding team, disruptive potential of the idea, market opportunity and validation – in that order of priority.
• Values-
  • Be founder-first: Being founder-first is the core of everything we do at Kstart. We invest in the dreams of passionate, driven and creative individuals committed to making impact and changing the world. As a partner we focus on providing founders with the very best support, while prioritizing their interests.
  • Enable network effects: Startups and founders need to tap into and form supportive networks. Even the very best founders can find this difficult at the beginning. Kstart seeks to provide a community of catalysts, technology partners, and peers that drive massive network effects. It’s a community that founders can count on for guidance on building blocks, market access, product-market fit, technology platforms, talent acquisition and culture, among many other areas
  • Fund disruptive impact: Kstart seeks next generation startups with a vision for disruptive impact. Our mission is to fund big, bold, and innovative ideas led by driven founders who transform industries and make a positive impact on millions of lives.
  • Uphold fair standards: We are committed to the highest standards of integrity and fairness in our interactions with founders, partners, companies and the entire startup ecosystem.

“Since valuation is an imprecise exercise at the seed stage, we offer capital in the form of a convertible equity instrument. We invest up to $500K in return for equity at a discount when raising Series A financing. By linking our investment to the next round of financing and valuation, we limit founder dilution at the seed stage. We also ensure the whole process is transparent, quick and easy to understand. Once a company is selected into the Kstart program, we are able to complete the investment in 2-3 weeks, provided the company is registered and all the terms and conditions in the term sheet are met.”

They provide fair capital ($500k), technology support, Kstart Institute and re space.

Media

Kalaari adds 3 new venture partners
Media platform name- ET
Date-2019
https://tech.economictimes.indiatimes.com/news/startups/kalaari-capital-adds-3-new-venture-partners-as-it-readies-4th-fund/67632833
The Bengaluru-based firm recently brought in Saurav Banerjee, former co-CEO of NDTV, Sreedhar Prasad, previously the head of consumer markets and internet business advisory at KPMG India, and Devneet Bajaj, the founder of agri-tech startup MITRA, as venture partners.

The hiring comes more than a year after Kalaari saw a top-level churn in which partners Sumit Jain, Bala Srinivasa and Prashanth Aluru quit.
Kola, managing director at Kalaari, said the newly-appointed executives come in with operating experience and are a part of the firm’s venture partner programme. They will primarily mentor portfolio companies and strengthen Kalaari’s investment team, which will continue to focus on fintech, health-tech, agritech, digital content, deep-tech and consumer internet startups.

Kalaari’s big success was its exit from Myntra in 2014, when the fashion e-tailer was sold to Flipkart for $330 million. It also took back $100 million from a secondary sale of Snapdeal stake in 2014 to SoftBank. However, the investment went sour when the e-tailer decided to stay independent after prolonged sale talks with Flipkart fell through. At the time Kalaari held 8% in Snapdeal.

Talk about macro tech trend in India
Media platform name- TIE Global Summit
Date-2020
https://www.linkedin.com/posts/kalaari-capital_india-digitaleconomy-activity-6636189312578883584-vt8Y
Finance minister talked about $5 trillion economy by 2025, $1 trillion will come from digital economy. Categorized digital economy into 3 pillar;a) traditional- IT/ BPO, telecom b)tech startup- $130 b invested, witnessing transition from urban users to new users ( non-urban areas), media tech – new community created, c) corporate innovation- eg. walmart invseting in India. Bullish on content tech startups like Yourstory, Scoopwoop.

Vernacular.ai raises $5.1M in Series A round led by Exfinity Ventures
Media platform name- Yourstory
https://yourstory.com/2020/05/funding-alert-vernacularai-exfinity-ventures-kalaari-capital?utm_pageloadtype=scroll
Bengaluru-based Vernacular.ai, an AI-based SaaS startup, has raised Series A investment of $5.1 million, led by Exfinity Ventures and Kalaari Capital. AngelList, IAN Fund, and LetsVenture also participated in the round.

Do startups need a banker to raise funds?
Media platform- Kalaari Capital
Date-2018
https://www.youtube.com/watch?time_continue=138&v=3ID2oHfzKT0&feature=emb_logo
Discussed role of a banker in a startup ecosystem, which is access to investors, how to put together investor material in a structured manner, bank acts as intermediary between investor and the company. Vani says in early stage founders should learn to raise their own capital.

Kalaari’s Investment Mantra : Vani Kola
Media platform name-ET Now
Date- 2016
https://www.youtube.com/watch?v=IWuzVjQBxhQ
Entrepreneurs with long term objectives fare better, ups and downs in industry is common. “We are looking for founder who are building capital efficient businesses , are smart about how they work with access to capital and building the business”. Advice to starups- be very clear about competitive differentiation, deep clarity unit economics, modulate cash burns and fund raising timeline.

Kalaari Capital’s Vani Kola on the Indian startup funding environment
Date-2016
Media platform – ET
https://www.youtube.com/watch?time_continue=13&v=g7MP9KkKJSU&feature=emb_logo
Vani looks for quality of the management team and their ability to work through the ups and down, and their understanding on the domain while investing in a startup. Higher level of funding depends upon ability to scale. Challenge faced by startups- not having any fundamental differentiation, building more IP rich companies should be the focus of entrepreneurs.

Analyst questions

• You look into quality of management team, define quality, what are the attributes that you look for while investing?
• You have been in the industry for a long time now, what have you learnt from your journey so far, that you would be doing differently now?
• Female founders in 2018 got only 2% of VC dollars, why is it so? What can be done to remedy this situation?
• Where do you add most value is it at entry, operational or exit? & How?
• What are the challenges do you face while making an investment decision?
• What kind of return expectation does that this segment (unlisted- PE) offers as ‘beta’, what kind of return (beta+alpha) should people expect while investing with you?
• You look for founders that are creating capital efficient business, how do you measure it?
• How do you put investments into PE and VC bucket at Kalaari Capital, what is the differentiating factor, if you can quote a dollar amount?
• You invest in early stage businesses, why didn’t you get AIF CAT1 license which is for VC funds in India , why AIF CAT2 license?