Exclusive: After aggressively investing in India, HK-based Swastika turns to Africa

Vaibhav Jain, Director, Swastika Company

Hong Kong-based seed stage investment firm Swastika Company has been investing aggressively in Indian startups at a time when other investors are taking longer to evaluate their investments.

“Its the best time to buy as you get better deals at less price. Its a buyer’s market now. In 2-4 years the market will be tough as valuations will go extremely north,” “Vaibhav Jain, Director, Swastika Company, told DEALSTREETASIA in an interview.

Incorporated in 2014, Swastika has already invested in over 12 companies since it became operational late last year, including at least three companies in the last one month and is now training its sights on the African market.

“We have invested in 10-12 startups already. We might look at investing another 4-5 by end of next year. There isn’t a particular number in our mind as such. If the idea is good with revenue potential, we will surely invest,” Jain said.

With a ticket size of up to $250,000 at the seed stage, Swastika’s portfolio includes SimplyMoveIn, Bangalore-based online used-books marketplace AbeRuk, Gurgaon-based on-demand concierge startup Qlivery, restaurant deals startup Pocketin and Gurgaon-based beauty and wellness startup Stylofie.

Swastika has also invested in African online B2B market place Esaja, and is gearing up to invest more in the region.

“We have already invested in a venture in Africa and are open to more opportunities in Africa. The plan is to get into equal number of startup investments in Africa as we have in India,” said Jain.

According to a recent report by Preqin, Africa has become increasingly attractive to investors, buoyed by its young population and growing middle class. This is evident from the fact that global private equity giant KKR  has set aside $100 million for investment in Africa.

“Despite ongoing concerns over slowing growth in Sub-Saharan Africa, Africa as a whole experienced significant growth in capital raised from $1.6 billion across funds closed in 2014 to $4.5 billion in 2015, a record for the region,” said the Preqin report.

Road Ahead

The sector-agnostic investor is currently bootstrapped, and plans to continue on the same path till it builds a strong portfolio.

“We do not have a fund for now and its mainly individual savings. The size of the fund is confidential an I cannot share this with you, however, currently we have enough funds to invest in a targetted number of startups. We are not looking at raising any funds for now,” said Jain.

“Next one year would be very exciting as many VCs who are on the fence now will enter the market with greater vigour. We are looking at holding onto our investments for at least another 5 years unless we get a superlative deal. So next one year our investments will reduce as valuations get expensive,” he added.

In the first half of 2016, the deal volume fell 13 per cent to 643 deals, according to VCCEdge data. Institutional funding in early and late stage startup has suffered this year. But angel investments have gone up, as they rushed to fill the seed-level funding void in India, among the fastest growing economies in the world.

However, there was little respite for late-stage startups struggling to raise funds. Also, angel funding rounds, while growing 16 per cent to 368 deals, were lower in terms of deal value, which slipped about a quarter to $100 million. That is a sign of a decline in average funding levels.

“For now, we will focus only on seed stage rounds as they have higher potential to give better returns over 3-5 year period,” said Jain. “Maybe raise a fund in 4-5 years time when we might plan to get into the post seed stage deals,” he added.

Also Read:

India Dealbook: Qlivery raises $230k from HK-based Swastika, Pramati HealthCare secures funding

India Dealbook: Sixth Sense invests in Grab; Stylofie raises $250k from HK’s Swastika

 

 

 

 

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.