How Endiya Partners’ 4x return signals strength in early-stage strategy amid shifting market dynamics

Hyderabad-based venture capital (VC) firm Endiya Partners has announced its second return to limited partners (LPs), and a 4x return on invested capital of its first fund of Rs 175 crore in 2016. An early-stage investor in themes such SaaS, cybersecurity, semiconductors, and digital health sectors, Endiya usually picks up stakes in companies at the pre-seed and seed stages as the first institutional investor.

Recently the VC firm saw a partial exit in Saas HR company Darwinbox in its latest $140 million funding; Endiya invested in Darwinbox at the seed stage. Sateesh Andra, managing partner at Endiya, is upbeat about more returns from the first fund. “At this time, we've given twice. That's not the end of it. There's a couple of IPOs coming up from fund one—Kissht and Curefit. So, it will deliver a lot more returns,” he tells Fortune India. Some of the investee companies from its Fund 1 have seen acquisitions such as Steradian Semiconductors by Renesas and Shield Square by Radware.

Endiya has raised corpus for three funds till date, with the first and second being Rs 175 crore and Rs 500 crore, while the corpus for the third fund, which closed recently, is Rs 800 crore. The VC firm looks at a small group of LPs for investments and its alternate investment funds have seen the likes of LIC and SIDBI (Fund of Funds), IFC, AIIB, Nippon, and select family offices partnering with them.

As a strategy, being thematic, product/IP-focussed, and looking at both global and regional investment opportunities have been a constant through all three funds, says Andra. While the first fund’s focus was on SaaS, cybersecurity, semiconductors, and digital health, “In Fund 2, we’ve added biotech, doubled down on SaaS and intelligent mobility investments," he says, adding that in Fund 3, it is looking at AI data investments in the enterprise vertical; industrial technology verticals like robotics, semiconductors and IoT sensors, and healthcare and life sciences. Andra plans to start deploying the third fund soon.

The firm, which typically invests in one or two rounds, cuts cheques of Rs 40 –50 crore per company. With global macro uncertainties and the markets seeing a correction, Andra remains bullish on VCs being able to raise money from LPs. “In a particular year, they may say let's pause, let's go next year and fund more. But their allocation to private markets is not going to reduce; it's only going to increase,” he says.