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Vertex Ventures’ Southeast Asia and India-focused fund has ramped up its investment activity in India, with a focused approach on AI-led businesses, fintech, and consumer brands. Following a slump in the broader funding environment for two years, the fund has seen a surge in deal-making since late last year.
“The last six months have been super active for us. Toward the end of 2023, as the market slowed, we ramped up conversations with high-quality founders. The first half of 2024 was spent building our pipeline and thesis, making the latter half intentionally hectic,” said Piyush Kharbanda, general partner at the fund.
Vertex Ventures SEA and India, one of Southeast Asia’s oldest venture capital funds, closed its fifth fund in September 2023 at $541 million, approximately 80% larger than its predecessor.
The fund typically invests in 6–9 startups a year, concentrating primarily on Series A rounds, with some exposure to pre-A and Series B deals.
“We lead all our deals, take board seats, and work closely with founders. We’re not in the business of low-conviction bets,” Kharbanda said, in an interaction with FE.
Some of its recent deals include contract lifecycle management firm SpotDraft, which raised a $54 million Series B round and is also backed by Prosus and Premji Invest. Another startup, Spyne, which offers AI photography and editing software for automotive dealers, raised $16 million in a Series A round, while D2C electronics brand Nuuk raised $4.6 million.
While the fund is largely sector agnostic, fintech continues to be a core vertical, particularly in SME lending and wealthtech. “There is a lot of activity in lending, and it’s a market that can never be fully saturated,” he said, adding that he also sees opportunity in serving the mid-HNI investors. “There’s a gap in the Rs 1–5 crore investable asset range, which legacy players have ignored.”
There is also a large opportunity in selling software to banks, especially around front-end and back-end workflows like collections and consumer-facing systems. While the sector has few scaled players due to high go-to-market costs, it’s one we continuously track, he said.
Besides fintech, AI-driven software platforms and consumer-facing brands also remain high on the fund’s radar. However, Kharbanda says that the fund is focused on discerning sustainable businesses from short-term hype when it comes to early-stage AI startups, where there could be a potential bubble-like behaviour.
“I think the one big thing that we’re trying to do is discern the real high-quality stuff from the very run-of-the-mill kind of companies. That’s what is taking a lot of time now,” he added.
The fund is also keeping a close watch on public market exits. “There is a high appetite for quality businesses. The appetite for absorbing new, innovation-led business models is extremely good today,” he said. Even with recent market corrections, public markets remain a viable route for scaled, profitable startups.
While India continues to be a priority market, Vertex also invests actively across Southeast Asia, with dedicated teams across Vietnam, Indonesia, Thailand, and Singapore. “We’re not tourist investors. We believe in having boots on the ground,” Kharbanda said.
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