Singapore-headquartered investment firm Venturi Partners is seeking to raise $150 million for a new consumer-focused fund to target growth investments in India and Southeast Asia (SEA), managing partner Nicholas Cator told DealStreetAsia.
Cator, a long-time executive at Belgium’s family-owned investment firm Verlinvest SA, launched Venturi Partners last year.
“There are no consumer-focused funds at this stage of growth. If you look at the venture capital (VC) stage, there are a number of specialised funds,” he said. “I, therefore, felt that there was a big opportunity to establish a consumer-focused fund targeting growth investments in India and SEA.”
The firm plans to target investments across the consumer space in FMCG, education and healthcare services. It is targeting investments in the range of $20-50 million as it gears up to bridge the funding gap for companies looking to scale up operations.
Venturi Partners made its maiden investment in Indian online home design firm Livspace, along with other risk capital investors. “It (Livspace) is also a good example of converging consumer trends between India and SEA and we expect it to become the regional leader in the interior design and renovation space over the next 2-3 years,” said Cator.
Edited excerpts of an interview:
What made you leave Verlinvest and look at setting up a growth fund targeting the consumer space in India and SEA?
Today, there is a funding gap for companies looking to raise Series B to D, or $20-50 million, in SEA and India. There are also no consumer-focused funds at this stage of growth. If you look at the VC stage, there are a number of specialised funds such as DSG Consumer Partners, Fireside Ventures, Sauce.VC, among others. L Catterton is there of course, but focusing on much larger transactions. I, therefore, felt that there was a big opportunity to establish a consumer-focused fund targeting growth investments in India and SEA. Our goal is to establish Venturi as the reference name in consumer growth transactions in both these regions.
How much is Venturi Partners targeting to raise and when do you plan to have the first close? Also, what are the timelines for the final close?
We are looking to raise up to $150 million, with a targeted first close this summer, and a final close by the fourth quarter of 2020 or the first quarter of 2021.
Tell us about the investment thesis for Venturi Partners. Given that the consumer segment is very broad, within that, what are the sub-sectors that you plan to focus on?
The consumer space both in India and SEA will continue to show above GDP growth in the next 10 years. Also, with the middle-class reaching a consumption inflection point, India is expected to be the third-largest consumer market in the world by 2025. We, therefore, strongly believe that the next 10 years will see the emergence of leading disruptive brands in a number of consumer categories, such as fast-moving consumer goods (FMCG), education and healthcare services. It is not so much about the sub-sector that matters, it is more about finding the right team with the right level of innovation in their brand, products or services that are either disrupting established brands or building a whole new market or value proposition for the consumer.
We also strongly believe that the convergence of socio-demographic and consumer trends between India and SEA will see the emergence of more and more regional players. As leaked in the press, our soon-to-be-closed investment in Livspace alongside Kharis Capital and other marquee investors such as TPG and Goldman Sachs is a good example of this.
We understand that Venturi Partners’s first deal was to co-lead the $100 million round in Livspace. Why Livspace?
Livspace is a good example of a great team completely disrupting a very large, yet highly unorganised market by offering full transparency, peace of mind and guaranteed quality to thousands of customers looking to renovate their home in India and Singapore. It is also a good example of converging consumer trends between India and SEA and we expect it to become the regional leader in the interior design and renovation space over the next 2-3 years.
How big is the funding gap in growth stage for consumer startups? How will Venturi Partners be different from other venture capitalists? What do you bring to the table apart from capital?
Entrepreneurs in the consumer space today are looking for more than investors. They want partners who can do a value addition, those who really understand consumers and brands. We believe that our unique and strong track record in the consumer space in the region combined with our operating and investing background proves that we can add real value to our portfolio companies. We can, therefore, be the preferred investor for founders looking to raise capital in the consumer space.
Venturi will bring together a small number of families with similar values looking to participate in the Asian consumer story. This will enable us to be more flexible than typical funds as we believe that it takes longer than the typical investment horizon of funds to build a leading and sustainable brand.
We also intend to be a focused fund, with only five to six investments, to make sure that we can be high conviction investors with less pressure to deploy capital aggressively and to have more time to support and add value to our portfolio companies.
We will be looking at ticket sizes between $20 and 50 million per investment.
Any anchor investor/s for Venturi Partners’s inaugural fund yet? What about Verlinvest – are they committed to backing you?
Frederic de Mevius, founder of Verlinvest, left the firm at the same time as me. He will be my anchor investor and will be on Venturi’s investment committee.
There is no investment or backing from Verlinvest.
India has seen the emergence of challenger brands, which are taking on big entities in the packaged consumer goods sector. How do you see this space in SEA?
SEA is five years behind India in terms of the emergence of disruptive brands in the FMCG sector. We, however, believe that this will be a very interesting sector to follow over the next ten years as digitally native brands bypass traditional retail and are able to create trial, awareness and preference much faster than ever before.
Can you share details of the team that you are assembling for Venturi Partners?
Not at this stage, but the team will have a combination of investing and operating experience, to make sure that we can support our founders and add real value along the way.