“EDITION 52”

Published: 6/5/2020

“EDITION 52”

Hope y’all had as exciting a night as I did this morning (re: oil futures tanking). I was making coffee in the morning, waiting for my standup to begin when I was watching the mayhem on Twitter unfold. And this day as a whole has been very intersting, as I end the day listening to Jared Leto talk about how he has been dealing with COVID. Also hello to all the new subscribers, hope y’all enjoyed the podcast

Coming to the days news, a new agritech company raises money (I have a couple of questions around the investors actually) & a story on VC funds in India [Disclaimer: I may/may not be super qualified to speak on this topic]

  • https://bit.ly/34TPCAN (Entrackr): Bijak raises a $12M Series A
  • ➡️ So Bijak, an agritech company, has just announced a $12M Series A round from prior investor Surge Ventures (owned by Sequoia) & Omidyar as well as a couple of new investors including Omnivore..

    ➡️ The first thing about the round that I found interesting that reportedly Surge led this round (as opposed to Sequoia themselves). Being a part of the Surge program doesn’t guarantee future investments from Sequoia themselves, but I thought it would make more sense for Sequioa India to lead the round (which makes seed & series A investments independently) as opposed to Surge (which to my knowledge is primarily an accelerator program (w/ funding) for seed stage companies).

    ➡️ Bijak as a company gives farmers working capital, enabling them improve their liquidity and capital cycles as long with letting buyers/sellers keep a ledger (khata) of their transactions and lastly facilitates the purchase/trade of crops and goods. The company is already available in 22 states of the country with over 80 commodities available on the platform.

    ➡️ The other interesting part of this investment was that both Omnivore & Sequoia recently invested in the Series A round of DeHaat, which while isn’t a direct competitor of Bijak but does overlap in certain areas (and possibly will more in the future as the companies increase their offerings).

    ➡️ It’s really interesting to compare this situation with that of Finix & Stripe (and Sequioa) in the US where Sequoia exited the cap table when they realized that there might be a conflict of interest in the future. But maybe the AgriTech industry in India isn’t deep enough for funds to make bets which are completely free of conflict (I personally don’t know enough about this space to comment).

  • https://bit.ly/34Q6Dfk (ET): VC funds could look for extensions
  • ➡️ I also came across this interesting article today that suggests that at least some VC funds are looking to extend their fund lifecycle by a couple of years.

    ➡️ The way that Venture Funds work is that they raise capital themselves from Limited Partners (LPs) and “deploy” that capital into investments in startups. The fund makes a “carry” (a certain % of the profits), while the rest is returned, with the principal amount, to the LPs.

    ➡️ A lot of funds are structured as 10 year investment vehicles, where the fund will generally make new investments over the first couple of years of a “fund”, and then the remainder is reserved for follow-on funding to continue to those companies.

    ➡️ The article suggests that there are several VCs in India that last raised funds in 2012-2014 who might request an extension from their LPs for a year or two.

    ➡️ Karan Mohla (partner @ Chiratae) also talks about how who your LP is could impact if they can offer an extension and how it may impact the secondary VC market in the coming future. As VCs continue to make investments over the next year, some LPs might be cash-strapped and could also be willing to sell their stake in a VC fund at a discount.

    ➡️ Here’s a good general reference on understanding venture capital if some of the terms sound a bit confusing: https://fundersclub.com/learn/guides/vc-101/understanding-venture-capital/

    Feedback & ❤️ always appreciated

    More tomorrow :) BONUS (Tweet of the day): https://twitter.com/kushalbhagia/status/1251759951208263681