The venture growth segment remains relatively untapped: Sameer Nath, Managing Partner, TrueScale Capital

Sameer Nath, Managing Partner, TrueScale Capital

Sameer Nath is managing partner, TrueScale Capital, as well as Iron Pillar India Fund I. According to him, the India venture growth opportunity is compelling. TrueScale Capital is filling a market gap as a Series B & C specialist. “India Tech is creating large and profitable companies. The digitisation of India’s economy has accelerated during the pandemic,” he tells Sudhir Chowdhary in a recent interview. Excerpts:

What was the aim of launching TrueScale Capital?
TrueScale Capital is filling a market gap in India’s venture growth as a Series B & C specialist. Our investment strategy is focused on backing tested founders demonstrating meaningful revenue and growth in large target markets in a capital-efficient manner along with proven product-market-fit. We invest in consumer technology companies digitising consumption in India and enterprise technology companies building products for the world from India. We leverage trusted relationships to gain access to break-out companies from early-stage VCs; work alongside founders to help scale their business, with a balance between sustained growth and operating profitability, which we believe is the ‘true’ scale.

Why do you think there is a need for a Series B/C VC specialist in India?
2016-2020 data from Tracxn shows that early-stage deal volumes were ~7x that of the growth-stage. Despite the euphoria in 2021, market data shows that the number of growth stage deals declined 23% y-o-y. The early-stage segment continues to be vibrant and competitive; the Series A deal funnel has never been deeper. Increasing pools of capital are flowing into the late stage. On the other hand, the venture growth segment remains relatively untapped. There is a compelling opportunity for a home-grown specialist—one that does not compete with the established VCs for early-stage deals and can bring relevant expertise to support founders—to become the investor-of-choice for Series B & C tech companies. TrueScale Capital seeks to become this specialist.

What is TrueScale Capital’s overall investment strategy?
Our venture growth investing experience coupled with our M&A and IPO expertise is directly relevant to our investment strategy outlined above. We have assembled a high-quality deal pipeline, and we look forward to deploying more capital soon. We are bullish on multiple B2C and B2B investment themes. In B2C, our pipeline features agritech, edtech, and fintech. In B2B, we are currently focusing on SaaS, cyber security, and vertical AI-ML.

What was your investment thesis for investing in Axio Biosolutions?
Axio operates in a $12 billion global market that has seen limited innovation. It is delivering pathbreaking products across 40+ countries eliminating technology risk, and it has secured two US FDA and two EU CE approvals eliminating regulatory risk. We were impressed by Axio’s R&D capability along with their capital efficiency in building out an intellectual property-led, world-class medtech company. Finally, Axio is backed by blue-chip early-stage VCs, all of whom we have partnered with in the past.

What are the opportunities in the Indian technology sector?
A significant majority of capital invested in India technology is from international sources. Increased domestic capital and more homegrown investment firms is needed, especially in the venture growth and late-stage segments. International liquidity in these segments has ebbed and flowed and is driven by macro cues unrelated to the Indian market. The sustained availability of domestic capital across the life cycle will positively impact India’s start-up ecosystem.

How do you see the Chinese impact on the flow of funds into India?
India overtook China in venture funding in July 2021 for the first time since 2013. In the short term, India is likely to see a boost in funding as global investors rotate out of China. The more important narrative is that India tech’s long-term fundamentals are robust. India tech is creating large and enduring companies, and the digitalisation of India’s economy has expanded rapidly during the pandemic. The pace of scaling and value creation has accelerated. Finally, the environment for IPO and M&A liquidity in India Tech has never been stronger.