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Tarun Davda On Why Matrix Partners Will Always Be A Founders First VC Firm

Tarun Davda On Why Matrix Partners Will Always Be A Founders First VC Firm

VC firm Matrix Partners inaugurated its Delhi workplace last month a good way to increase its investments in Delhi-primarily based startups. As stated by way of Managing Director, Tarun Davda, in beyond 18 months, 30-40% of the startups they had been meeting have been based totally in NCR. The company is now looking to expand its consumer Internet portfolio in addition to serve what it believes is an underserved market by way of buyers. In this direction, Matrix Partners has moved three of its traders inside the capital city to better connect to the startup surroundings in Delhi.

Delhi-primarily based startups have upped their ranks in the funding charts in the current past with the success of Delhi-based organizations like Zomato, Paytm, OYO to call a few. As consistent with cft DataLabs investment record for H1 2017, Delhi/NCR witnessed 128 offers and $2.129 Bn funding at some stage in January-June 2017.

The Delhi office is Matrix Partners’ 0.33 workplace in India after Mumbai and Bengaluru. The US-based totally private fairness funding company specializes in early stage and overdue level ventures inside the mobile-tech, customer, healthcare, Internet and software space and invests among $2 Mn to $a hundred Mn. Its first India fund, of $one hundred fifty Mn, turned into raised in 2006, and an extra $150 Mn became raised in 2007. The VC company raised $300 Mn for its India-focused 2nd fund in 2011 and then crowned it with $one hundred ten Mn final April. Some of its biggest bets encompass Ola, Practo, Mswipe, Treebo, Quikr, Dailyhunt, and Razorpay among others.

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In a conversation with cft, Matrix Partners Managing Director Tarun Davda spoke in detail about why Matrix has set attractions on Delhi, the focal point of the company this yr, and its tackle present day technologies like AI, VR making waves internationally.

Delhi’s Startup Belly And Matrix Partners

cft: Why did Matrix Partners selected to open an office in Delhi now?

Tarun Davda: We were searching at our personal inner sourcing data and we realised almost 30-35% of the corporations that we have been assembly had been based totally in Delhi. And this variety has multiplied in the last 12-18 months. Our crew was continuously visiting to Delhi all the time. You see, inside the range of deals that are announced, most are in Bengaluru and also you don’t see too much coming from Delhi. There might be  motives for that, either the high-quality of startups in Delhi is not right whilst there is nevertheless loads of volumes. Or 2nd motive will be that VCs are busy looking in Bengaluru so Delhi receives sidelined.

Our view is it’s not the former; it’s more likely the latter in which VCs are busy in Bengaluru. So we thought maybe there is an opportunity that we aren't looking at thus far. Also, we are not witnessing that the largest cost introduction companies are in Delhi like an Oyo or a Zomato or a Paytm or a Hike. Or for that rely, even huge public internet agencies like MMT and Naukri. So even in phrases of cost, Delhi is shifting in advance. So we felt when the deal extent has long gone up in addition to fee introduction has elevated, we are doubtlessly missing out on a massive opportunity in Delhi.

Having a bodily office ensures neighborhood startups can technique us easily as the overall notion is that it’s easier for them to get a meeting with a VC inside the equal metropolis. Then once more, we have humans in our groups who are spending 60%-70% in their time in Delhi. So it becomes type of hard on productiveness. The combination of a lot of these factors and the reality that we even have a robust Delhi community made us believe it is the proper time for us to be doing it.

cft: With an workplace presence inside the Delhi startup surroundings, what are the sectors that the Matrix Partners will consciousness on?

Tarun Davda: We are targeted on some thing that is type of tech-led and tech-enabled, be it ecommerce or travel or SaaS. So we are able to stay bullish across these kind of sectors-something that is Consumer Internet or cellular or SaaS. That having said, after meeting entrepreneurs in Delhi, we see that much like there may be an affinity within the Chennai atmosphere to construct SaaS organizations and not too much Consumer Internet stuff comes out from there, Delhi marketers will be predisposed to construct products which have a little greater industrial layer to it. Which is why you notice, a Paytm or Zomato which either has a sturdy foothold in operations or a robust foothold in transactions. So as a natural end result, those are the type of agencies that we can come to be focusing on within the Delhi ecosystem.

Matrix Partners: Funds And Focus

cft: Is Matrix Partners also planning to raise the third fund? What’s the popularity of second fund, how much corpus of the second one fund has been invested to date?

Tarun Davda: We raised a $250 Mn 2nd fund and then topped it up with another $one hundred ten Mn. So we are nevertheless investing from that. About 50%-60% of the fund has been invested. We are not making plans to elevate a third fund right now. We have sufficient dry powder so maybe as soon as we've completely invested from the current fund, we can study elevating a third fund.

cft: What are some of the developments which you have found in early stage VC making an investment this yr?

Tarun Davda: The most pastime that we've seen this 12 months is in Fintech. We have seen plenty of deal activity and a variety of cost creation a lot in order that a few humans assume it even might be a bubble. Also, inside the closing 12-18 months, given that client tech is going via a lull phase, we're seeing loads of hobby happening in the B2B commercial enterprise area. So B2B logistics which historically has been much less attractive is witnessing a whole lot of interest. Especially due to GST, we see a whole lot of SMEs starting to undertake the era. As a end result, lots of B2B agencies are gaining traction.

cft: As a VC company, what has been your cognizance this year?

Tarun Davda: We are “founders first” in each thing of the manner we assume. Wherever we find an first rate founder, no matter area, we are bullish on that. A zone via itself has no that means unless you find a person splendid who're building something within the region.  Though of course as a team, we're dependent to inspect diverse sectors. So, as an instance, I deal with SaaS or ecommerce or vertical classifieds or healthcare.

cft: What are a number of the a hit exits of Matrix Partners?

Tarun Davda: Itzcash is one among our a success exits this 12 months. A year earlier we did a component sale of our stake in Cloudnine health center chain and Quikr. We additionally had a big exit in women’s style emblem W. Hopefully, there will be more to come within the next 6-twelve months.


cft: What are the key things Matrix Partners seems for backing a startup?

Tarun Davda: Honestly it’s now not very exceptional from another VC. We are seeking out founders who're resilient, fairly passionate and active, in it for the lengthy haul, have a sense of emergency and want to resolve the hassle quicker earlier than anyone else does. Basically, founders who've a great product or tech perception to construct a scalable product. And who recognize what it entails to build those type of merchandise. Founders who have a completely unique insight and may be at instances have individually skilled the hassle so that they have an appreciation for his or her end customers and the way they clear up the problem. Every VC is seeking out some shape of this in an early stage crew although of route, these aren't easy things to pick out up in communication.

cft: What are a number of the destiny technologies, as in keeping with you, that the VC network is seeking to bet on?

Tarun Davda: While globally the speak is all approximately AI, Blockchain, AR/VR and self-driving vehicles, glaringly in India, we're in a one of a kind existence cycle of evolution right now. There are loads greater essential troubles which humans are fixing proper now. For instance deliver chain within the US is highly optimised while in India, the fundamentals of the deliver chain to move goods from one part of the united states of america to another are nonetheless not shaped. So it’s going to be some time earlier than we start seeing those thoughts come to India.

We are nonetheless constructing simple blocks whether or not its fee or logistics or getting human beings to come and transact on-line. A lot of the issues human beings are still fixing today revolve round getting the primary penetration done. My own experience is that we're every other couple of years faraway from the new age technology.

With its new office in Delhi, it seems VC firm Matrix Partners may be very serious on harnessing the emerging potential of the NCR location which over the last few months has emerged as an similarly attractive vacation spot as Bengaluru in terms of new startups. Currently, 50% of Matrix’s portfolio companies are based totally in Bengaluru (including Practo, Quikr, Ola, Razorpay, Loadshare) at the same time as 15-20% are located in NCR (along with LimeRoad, OfBusiness). How tons of a alternate inside the composition of its portfolio will this pass carry might be thrilling to examine inside the coming months.

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