Singularity AMC, backed by investor and former Reliance Capital executive Madhusudan Kela, has set up Singularity Growth Opportunities Fund-1 (SGOF-I) to provide growth capital to technology-driven companies.
The Fund will target a corpus of ₹600 crore, of which the company has raised around ₹350 crore and ₹150 crore has been deployed across six companies.
Five of its investments comprise B2B device lifecycle management platform Servify, cloud telephony platform Exotel, education-focused lending startup Eduvanz, innerwear brand XYXX and personal care brand mCaffeine. “The sixth investment has been committed and will be invested by the first quarter of FY23,” Yash Kela, founder and chief investment officer of Singularity AMC, said in an interview with VCCircle.
“We plan to invest in around 12-14 companies with 1-2 deals in a quarter. By December 2023, we should have deployed our fund entirely. We aim to make a gross return (internal rate of return-IRR) of around 30%, he added.
SGOF-1 has so far raised capital from largely global and domestic family offices and ultra-high networth individuals including the likes of Paytm chief Vijay Shekhar Sharma. They are also eyeing capital from two institutional investors including a fund of fund and an insurance firm.
The fund will focus on investments in companies in the insurtech, fintech, software-as-a-service (SaaS), education loans and services, digital customer communication, differentiated beauty and personal care, among others.
Typically, the fund, which has a shelf life of six years, will look at making investments around ₹35-60 crore per investment across 12-14 deals over the next two years.
“The thesis of the fund is to invest in Series B to D rounds in growth stage companies, which are typically between ₹50 to 200 crore in revenue. The portfolio will be equally split between B2B (Business-to-Business) SaaS or Indian companies which are built for global markets; and B2C companies which are built for either tier 1 or Bharat…Very few funds want to do both B2B and B2C… that has been the most capital efficient category of investing I think,” Yash Kela further said.
Post investments, Singularity also plans to facilitate bridge equity, co-investment and partial secondary buyout options.
“We aim to be the preferred provider of growth capital and differentiated capital markets access for technology-driven companies in India. Over the next five years, asset management platforms will emerge which act as a bridge between tech and capital market ecosystems and we aspire to be the leaders. We believe that a lot of growth-stage companies will be ripe to access the capital markets in 3-5 years, 3 out of our 5 companies would likely get listed in this time frame,” said Yash Kela, who has also founded Arrivae, a home and office improvement full stack solution, and currently is the CEO of the firm.
Singularity AMC is promoted by Madhusudan Kela-founded family office Singularity Ventures which started in 2016. The asset management firm was established in August last year by Kela’s nephew Yash Kela to focus on investments in new-age companies across financial services, consumer brands, telecom networks and precision manufacturing.
The family office makes co-investments as a limited and general partner (LP and GP) through funds such as Artha Venture Fund, Sixth Sense, 3one4 Capital Iron Pillars and Trifecta Leaders Fund, among others.
It recently invested in financial platform KarmaLife.
On the growing market, Yash Kela said “We wanted to see how Indian capital markets absorbs these companies, these valuations. So we wanted headway for ourselves when we can navigate some of these companies in that direction… I think companies that we are participating have a liquidity of three to five years and then one of their possible outcomes can be a listing on Indian or international capital markets.”
Since inception, Singularity Ventures has invested around a couple of hundred crore rupees in around 30-35 portfolio companies including Insurify, Keto, Market Simplified and others. Almost 60% of the investments have been exited at an IRR of around 50%. It plans to make further 7-8 exits this year.
The family office has also exited some of its investments such as Clovia and Fynd to Reliance Ventures.
Going ahead, Kela said that Singularity AMC will look at doing multiple products including a late stage listed-tech fund and a structured debt product, among others.