Barely one week into 2021, Mirae Asset Venture Investments, the Indian venture capital arm of South Korean financial services firm Mirae Asset Financial Group, said it was setting up USD 35 million fund to back early-stage companies in the country.
Previously, Mirae had been investing in Indian startups through its global funds. In the past two years, it has poured in nearly USD 200 million for companies in the world’s third-largest startup ecosystem, cutting checks for firms like mobility firm Ola, e-grocery platform BigBasket, food delivery company Zomato, and hyperlocal logistics firm Shadowfax.
Globally, the 24-year-old, Seoul-headquartered Mirae manages USD 2 billion across its various venture capital funds, including Mirae Asset Naver Asia Growth and Mirae Asset Naver I. It has backed companies like Didi Chuxing, Grab, HappyFresh, Bukalapak, Glovo, RedDoorz, Deskera, and Impossible Foods.
“There is not a single Korean investor who would put in USD 200 million in two years. That itself shows that we are fairly aggressive in the Indian market,” Ashish Dave, chief executive of Mirae Asset Venture Investments, told KrASIA in an interview. Dave has been handling the Korean financier’s movements in India since 2018, chiefly looking at three core sectors—consumer internet, fintech, and Saas—which he believes cover 80–90% of the tech sector.
Mirae will level up its investment game in the world’s second-most populous country, Dave said.
KrASIA (Kr): How has Mirae’s investment strategy evolved in India?
AD: We are South Korea’s largest financial services firm, with over USD 450 billion of assets under management (AUM). We have been committed to India for the last 13 years. Back in 2008, we set up a small USD 50 million mutual fund in the country, which we have now scaled to about USD 9 billion AUM.
Mirae wanted to add another asset class with the private market. That is why I joined three years ago. We started deploying capital from the global fund. After we reached a comfortable level, we took the next step to set up a dedicated, India-focused fund. It was a natural progression.
When we came in, we focused only on growth and early growth. Now we are focusing across multiple stages. We are going to be a multi-stage player with dedicated funds for every stage.
Kr: What are your plans for the recently launched early-stage fund? How does it fit in Mirae’s larger scheme of things?
AD: We were waiting for the right time to start the early-stage fund. We got the license last year, but because of the pandemic, we kept it on hold for a while. Now that we have launched it, we will be backing fintech, consumer internet, and SaaS startups from this fund.
This is a focused fund that will have a check size between USD 500,000 and USD 2 million. If there are very good early-stage opportunities that I come across, and end up investing a lot more, then I have an option to scale the early-stage fund to USD 75 million.
The mid-sized fund that we have cuts checks between USD 3 million to USD 5 million. The growth fund cuts checks above USD 10 million. This lets us invest across stages. You create multiple funds because, based on the ticket sizes, you can take calls. I can’t deploy funds from the early-stage fund when I am putting money in Zomato, which has a ticket size of probably USD 40 million. So you create multiple funds to segregate the risk.
From the early-stage fund, we plan to make ten investments in the next two years. We will also make three to four investments from our growth fund.
Kr: Early-stage competition among the VCs has intensified in the last few years. How will that change the deal flow?
AD: There is so much entrepreneurial activity that there will always be a shortage of funds. I don’t see early-stage VCs as competitors. There are opportunities where we can work with them.
Besides, good competition is always welcome, as it only brings efficiency. Too many funds would mean too many companies, which leads to job creation. In the US market, there are so many funds that no one cares about the competition over there.
With that said, we are not a typical early-stage fund, because we are fairly selective about the kind of companies we invest in. Our bar is quite high. We won’t be taking the same risk as the likes of Sequoia, which invests in a large number of early-stage companies, because you take risks based on your pocket size and strategy. We are not conservative, just very careful.
We don’t want to spray and pray. We believe in a very focused approach, and we are long-term players in the market.
Kr: Before joining Mirae, you were with Indian VC firm Kalaari. What is your investment philosophy as an investor?
AD: As an investor, I don’t stick to the views that I formed two years back. I don’t keep myself anchored to biases. We have to be agile because we live in a world that is continuously changing. For instance, a lot of investors waited or did not bet on SaaS in India, and they lost out. You have to be open and look at every sector from that perspective, provided you have a team, bandwidth, and capability to make investments.
I want to invest in founders who are operating in massive markets and are solving important problems either by making things easier or cheaper. At the same time, I am backing founders who are willing to create sustainable institutions, and who have clear monetization models.
Kr: Many Indian startups may go for IPOs beginning this year. How does that change VCs’ outlook toward the Indian startup ecosystem?
AD: A question that a lot of LPs have asked us about the Indian ecosystem is where are the exits? The IPO market will validate the Indian ecosystem and show it is strong enough to deliver great sustainable companies.
Secondly, IPOs remain the main exit for venture capital money. Every fund has a lifecycle, and when the capital is returned to its investors, new funds are set up, and that money goes back into the ecosystem.
Another thing to keep in mind is this: you have to allow retail Indian investors to participate in the India tech growth story. They can only do that if these companies get listed publicly.
Kr: Is there a particular trend you are excited about?
AD: Fintech remains a key area of interest for us because it is still under-penetrated. We still don’t have great companies and products in the space. We believe there is a lot of value yet to be created in fintech. For instance, every Indian needs banking services and there has to be a great amount of customer service. We are open to all areas within fintech, including lending, investments, payments, and banking.