Olios plans to launch a fifth sector-agnostic fund of $150 million to $200 million next year to invest in early-stage startups.

The Mumbai-based firm, which has investments in companies like Mobiquick, FarmEasy and Country Delight, is open to all sectors including software-as-a-service, agritech and healthtech, and is stepping up investments in early-stage startups in the $1 million to $2 million range, Sukhmani Bedi, a partner at Olios, said in an interview.

So far, nearly half of the $150 million fourth fund has been invested in startups including climate tech company Varaha and bond lender Lendbox.

“We hope to complete investments from our current fund by early next year and start raising funds for our fifth fund by June 2025. We remain focused on the domestic ecosystem as we believe in the India consumption story,” Bedi said.

The size of the fifth fund could change depending on interest from limited partners, but Bedi said $150 million to $200 million is a good number to generate high multiples.

“Some funds that received big cheques from LPs went beyond the Indian market to generate hyper returns. But as a domestic fund, we have found that a fund size of $150-200 million is sufficient to invest in the Indian ecosystem and generate high returns,” she noted.

Ample opportunities

Orios launched its first fund in 2014. ₹The following year, it raised Rs 3,000 crore. It has backed 18 companies, including dairy startup Country Delight, e-pharmacy FarmEasy and shared-house company Zostel. The fund is said to have returned 1x profits to its LPs and said in January it expects earnings to grow in 2024 and 2025.

“Looking back at Fund I, we see that the opportunities for startups have grown multi-fold. Technology has spread across India and into the hinterlands. It has expanded beyond consumer internet to B2B, SaaS, EV, climate tech and hardware,” said Rehan Yar Khan, managing partner at Olios.

In 2021, Olios created a $30 million opportunity fund to reinvest in emerging winners such as Country Delight and FarmEasy.

Olios’ fourth fund comes on the heels of the departure of two partners, Anup Jain and Rajeev Suri, and Bedi said the firm plans to hire replacements soon, given the seniority and importance of the roles.

“Now halfway through two funding rounds, we are conducting audits more frequently than before,” Bedi said.

Rapid business transaction support

Over the past few years, “building from India for the world” has emerged as a key theme attracting investors, especially in tech-centric sectors like deep tech and climate. But Olios wants to stick to its philosophy of backing home-grown startups, especially those solving problems relevant to the country, Bedi said.

“We are keeping a close eye on cross-border startups and SaaS businesses that are garnering global interest, but we’re not going to jump into anything due to FOMO (fear of missing out),” Bedi added.

According to Bedi, India’s changing consumption patterns have led to the phenomenal growth of quick commerce, proving many venture capital investors’ initial assumptions wrong. According to a JM Financial report, quick commerce is set to grow 10x from 2021 to 2023, driven by urban consumers’ need for convenience.

But rather than investing in quick-commerce companies, Bedi said Olios will look to back related companies, such as logistics and tech companies, in both its current fund and its next one.