Tamil Nadu has scored well in terms of attracting Private Equity (PE) and Venture Capital (VC) investments during the first quarter of 2018. While the number of deals remained stagnant, the value of investment has increased by 39%, attracting investments from marquee investors like Morgan Stanley and ChrysCapital.
Data collated by Venture Intelligence, a research firm focused on private company financials, transactions and their valuations shows that for the first quarter of 2018, the state saw investments to the tune of $199 million (13 deals) compared to $143 million (16 deals) during the same period last year. However, when compared to last quarter (Q4 of 2017) the investments have dipped from $262 million (10 deals) to $199 million (13 deals).
Overall, PE firms invested about $3.7 billion (across 133 deals) during the quarter ended March 2018 – down 49% compared to the $7.3 billion (across 200 transactions) in the same period last year. The investment amount in Q1’18 was also almost 29% lower than the immediate previous quarter.
Arun Natarajan, founder and managing director of Venture Intelligence, said, “While the number of deals was similar compared to the same period last year, the value of the investments has increased.” Chennai-based companies are best known for their strengths in the Enterprise Technology and Financial Services domains. “Given that these sectors are currently the most favoured sectors among VC and PE investors, its making companies in the city emerge stronger on investors' radars,” he explained.
Krish Subramanian, co-founder and CEO, Chargebee, said, “B2B companies require certain gestation period to mature product and scale. I believe that it's a reflection of the maturity of the companies that are graduating to the next level.” Last month, Chargebee secured $18 million in growth capital, led by New York-based Insight Venture Partners. The Series C investment also saw participation from previous investors, Accel Partners and Tiger Global Management.
‘Too early to celebrate’
A serial investor, who didn’t want to be quoted said that the investments have gone up only because of one big deal (Global Sports Commerce). “Only one firm has managed to raise more than $80 million. I don’t see any other dramatic change. It's too early to say we are faring well,” he differed. Concurred the founder of a startup which got funded this year, “Most of the major investors are based in Bengaluru and this is a huge challenge for startups headquartered here. We get to meet then only during events. Access to funds is still a cause of concern for many firms in Tamil Nadu,” he said.
The study by Venture Intelligence also shows that three startups have bagged angel investments during the first quarter of 2018 compared to six deals during the same period in 2017. In January 2018, Chennai-based Paperflite, a SaaS (Software as a Service) startup, had raised $400,000 (Rs 2.55 crore) in seed funding in a round led by The Chennai Angels (TCA). A few days later IIT-M incubated, Planys Technologies, an underwater robotics startup, raised $1.04 million as the first tranche of $2.13 million Series A round. Appiyo Technologies, which offers enterprise workflow automation solutions, hadraised a $500,000 seed round, led by Axilor Ventures with participation from The Chennai Angels and others in March this year.
V Shankar, President, The Indus Entrepreneurs, said, “Chennai is more the home of enterprise tech and fintech. These are all-weather industries and will capture interest more or less without serious impact from environmental conditions. Many of the rest of India PE/VC investments are into consumer internet, infra and real estate, which are responsive to environmental conditions.”
