Mumbai: Fintech has always been a heavily regulated industry, but given that the Reserve Bank of India (RBI) has been an extremely involved regulator, thinking long term, Lightspeed Venture Partners will continue to invest in fintech in India, said Anuj Bhargava, managing director and head of corporate and strategic development for India and South East Asia at the global venture capital firm.
The firm has invested in Acko, Razorpay, Zolve, Incred, Uni and Xflow, among others. “Whatever it (RBI) comes up with, (it) has a good reason for it. Good companies will always be on the right side of regulations,” Bhargava said on the sidelines of Lightspeed’s annual event in Mumbai for investors and portfolio companies.
“RBI has a wider mandate and it is not against any company,” he added.
Bhargava’s observations come close on the heels of a regulatory crackdown on Paytm by the central bank. The listed fintech behemoth is in the eye of a storm due to its poor governance standards.
Having spent 20 years as an investment banker, Bhargava joined Lightspeed in 2021. The firm invests from its early-stage and growth funds in companies in India and Southeast Asia. It also backs consumer, business-to-business (B2B), edtech and enterprise tech firms.
Within edtech, Lightspeed was an early backer of Byju’s, the edtech firm that is caught in a slug fest with its investors and lenders. Though Lightspeed has already cashed out of the company and now holds less than a 1% stake, it continues to believe in the sector. “We are yet to take a call on whether we will subscribe to the rights issue or not. Our stake in the company is minuscule,” Bhargava said, when asked about the proposed rights issue by Byju’s parent Think & Learn Pvt. Ltd at a valuation of just $20 million, or 0.1% of its peak valuation of$22 billion in 2021.
Lightspeed, which is among the few global venture capital firms investing in the Indian market, is bullish about its growth prospects. In 2022, it reached the hard cap of $500 million for Lightspeed India IV fund, signifying the maximum amount raised. This India-focused fund is integral to its global fund totalling $7 billion, dedicated to back both early and growth-stage entrepreneurs.
It has invested $1.5-1.6 billion in venture and growth-stage firms in India, including Oyo, Udaan, Sharechat, the Indian Energy Exchange, Acko, Darwinbox, Globalbees, InnovAccer, OkCredit, Apna, Pocket FM, Teachmint and Zetwerk, among others.
In the past one year, it has struck 18 new deals in India, deploying over $250 million (across stages), including follow-on investments in 8-10 firms. It has invested around 25% from its new fund so far.
“We continue to be bullish on India. We adhere to first principles and are disciplined in our investment approach.”
According to Bhargava, valuations have corrected significantly over the past 18-24 months to reach pre-covid levels. With he valuations still under pressure, Lightspeed expects to pump in more money through 2024 backing new and existing portfolio firms. “We look to invest more in 2024 than we did in 2023,” he added.
Bhargava said consolidation is underway across industries, with stronger players leveraging cash reserves and stock to acquire smaller competitors and consolidate their positions in the market.
“Stronger companies will use their cash and stock to acquire companies. Businesses that don’t see a path to profitability will get consolidated as it is difficult to operate on a standalone basis,” he added.
