Info Edge's tech start-up investment coffer much larger at Rs 750cr

Sanjeev Bikhchandani-led Info Edge, which owns and operates India's largest online job portal Naukri.com, has created a Rs 750 crore war chest for its maiden venture capital fund to invest in tech start-ups. Noida-based Info Edge on Thursday informed stock exchanges that it has set up Info Edge Venture Fund (IEVF) to invest in "tech and tech-enabled entities that provide technology to create, market and distribute innovative products and services that benefit consumers at large."

While the filing put the contribution in the new fund at Rs 100 crore, sources in the company said what is being mentioned is just the initial amount and the planned fund size is Rs 750 crore.

Further contributions will be made into the Fund as investment opportunities are identified, they said, adding that the company management expects internal accruals from operations will be more than adequate for this purpose.

Info Edge, by setting up its own investment vehicle, joins the likes of home-grown technology titans Infosys and Wipro. Most other large Indian corporates have primarily preferred to invest from their respective balance sheets.

While Wipro through its strategic investment arm Wipro Ventures has closed its second investment fund - the USD 150 million Fund-II, Infosys - that launched its Innovation Fund in 2015, has invested in multiple startups.

On Thursday, Info Edge announced an investment of Rs 100 crore into a Category II AIF Info Edge Venture Fund sponsored by its wholly-owned subsidiary Smartweb Internet Services Ltd. This had led to some speculation that Info Edge has set up a 100 crore VC fund for investment in tech start-ups.

Sources said Rs 100 crore was only the initial capital and the corpus was as large as Rs 750 crore.

In the last three years, Info Edge has invested around Rs 800 crore in external start-ups, either directly or through its wholly-owned subsidiaries, and the investing activity is likely to continue at the same rate.

The Info Edge external investing programme is widely regarded as a success by both shareholders and the start-up community.

It has been a prolific investor in India's startup ecosystem, having backed companies, which have since then, emerged as some of the country's most richly-valued ventures, such as food delivery and restaurant recommendation company Zomato, and online insurance aggregator PolicyBazaar, both of which are in the fabled unicorn club.

Being the first investor in unicorns like Zomato and Policybazaar, it continues to be a meaningful shareholder in them.

Sources said as the investing activity has grown, the company felt the need to create an AIF through which investments would be made. This investment vehicle is a preferred route for a number of reasons, they said.

First, it would be more entrepreneur-friendly from a compliance, regulatory and angel tax perspective. Second, it would bring increased rigour and discipline into the Company's investment strategy. Third, it would bring more focus on the exit strategy. Fourth it would provide a structure where the company can attract and retain the best talent for VC investing through alignment of interests.

Sources also clarified that Info Edge Ventures will focus on making financial investments into start-ups. Strategic investments into start-ups in the jobs, real estate, matrimony, and education classified space will continue to be made directly through the parent Info Edge and its subsidiaries, as will acquisitions and any follow-up investments in existing portfolio companies.

The team managing new Investments at Info Edge Ventures will continue to manage the existing financial investment portfolio as well. And the team managing strategic investments (non-financial investments) shall remain the same as earlier.