“We are not about investing in a company that is going to be the Uber for India or Airbnb of India. We are investing in companies that are solving for India in terms of solutions that are laid for India — solutions that have never been trusted before anywhere else in the world,” says Prashant Mehta, partner at Lightbox Ventures.
The Mumbai-based venture fund is something of a veteran in the Indian market and has been around since 2014. It’s one of the biggest investment firms in India with a portfolio of 21 early-stage tech companies. In 2019, the venture capitalist added three new startups in its portfolio — hyperlocal delivery platform Dunzo, women wellness company NUA and pharmacy chain Generico.
The company also raised $209 Mn for its Fund III, exceeding its initial target of $200 Mn, with the participation of 28 investors. The investors include institutions, endowments, sovereign funds, foundations and family offices.
Talking about 2019, Mehta says, “2019 was the year when Lightbox Ventures not only built a foundation but also managed to springboard from there. The company also closed its third fund. We believe that a really strong sign of the faith that our investors have put in us. We were able to expand the number of investors that are investing in the fund.”
The Investment Strategy That’s Paying Off
Diving into the Lightbox investment model, strategy and the support offered to startups, Mehta says the idea is to invest in only a few startups every year. “This allows us [Lightbox] to help the companies make better decisions and spend more time on them,” he notes.
Moreover, Lightbox believes that investors have started benefiting from this strategy. “For most investors, that are looking at these kinds of ideas, you really need a strong level of conviction to get behind these sort of Ideas. And we did, over the course of the last 6 years.”
Lightbox not only helps in scaling up a startup but in building a strong foundation for future growth as well, Mehta insists. “We all have significant experience working at startups, built companies and understand what it takes to be an entrepreneur. We work well together and that helps give us a lot of leverage,” he added.
Passing The Lightbox Test
Talking about the VC’s plans for 2020, Mehta says healthcare, financial services, content and technology to bring more outfaced value for solutions for customers are some of the sectors Lightbox will be looking into.
Earlier this month, Lightbox led a Series C funding round in Chennai-based agritech startup WayCool with a $20 Mn investment.
The thing that struck Mehta and Lightbox was the manner in which WayCool’s founders — Karthik Jayaraman and Sanjay Dasari — have focussed on the essentials. Jayaraman and Dasari managed to scale the company even with the limited capital, which was a key decision factor. This made Lightbox confident about the company‘s focus.
“That [the initial drive of WayCool founders] gave us a lot of confidence in what they have achieved with the money. We [Lightbox] wanted to see what the company can achieve, if provided with the right kind of funding. Sky’s the limit. I would say that summarises our thought process,” Mehta added.
Moreover, agritech in itself is a tough sector to cut one’s teeth on. As Mehta says, “Agritech is not a very easy sector to operate in. It is not a glamorous sector. But WayCool has invested in this for a long time to have the kind of impact they want to have. We have seen the commitment they have made — personally, professionally and in terms of time. I think that is a big part of what excites them.”
The VC Game: Some Hits And Some Misses
Not all of Lightbox’s investments have gone down well with its limited partners, which is perhaps something most VCs go through. As an example, Mehta cites the investment in cloud kitchen platform, Rebel Foods, previously known as Faasos.
“When we made that investment, most people said ‘what are you doing?!’ You are a tech fund and you are investing in a 60 store kitchen/ restaurant business. That was probably all they knew, but we were going to deal with the business, together with the founder,” Mehta added.
Similarly, people also raised their eyebrows for the investment in fine jewellery brand Melorra, saying that people like to feel and touch such precious products before buying them. But the company managed to prove them wrong as well.
But Lightbox bets have proven to be successful. Mehta mentions the example of Embibe, which was acquired by Reliance in December 2019. This was the quickest exit for Lightbox, which had invested in Embibe in 2015 from its Fund II.
“We are seeing a greater trend in sustainable companies, both in terms of financials and the impact they create. We don’t want to be a charity or impact fund, but we see that there is going to be a strong correlation in the long run with training and building great companies, which are also sustainable. Each company will have to find that ingredient or DNA.”