Physis Capital, a growth-stage investment fund, on Tuesday announced the first close of its $50 million fund at $7 million as it works for a final close in 2024.
The fund is expected to begin investments by the third quarter of this calendar year, supporting start-ups looking to raise Pre-Series A to Series B capital.
Physis Capital’s announcement comes at a time when the Indian start-up ecosystem is witnessing a funding slowdown. According to data from Tracxn, a market intelligence platform, start-up funding in the first quarter of 2023 dropped 75 per cent year-on-year to $2.8 billion.
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“We have seen investor interest remaining steady with respect to startup investments in the Indian startup ecosystem. ‘Smart money’, i.e., experienced investors realise that downturn economic cycles are the best times to identify great businesses and invest in them,” said Ankur Mittal, partner at Physis Capital.
“Hence, we’ve received good interest in the past few months, especially from new investors who are backing the GPs and investing with us for the first time, looking at our track record,” Mittal said.
Physis Capital aims to build a portfolio of 15-20 start-ups, with an average ticket size of $2.5 million. Its fund will be focused on identifying companies that have a solid business model and are likely to generate sustainable returns in the long-term.
“While majority of funds raised by Physis Capital so far are from Indian investors belonging to HNIs and family offices, we are now receiving significant interests from investors across multiple international locations including Singapore, USA and UAE. Along with these international funds, we are in the process to raise funds from institutions and commence deployment,” said Mitesh Shah, partner at Physis Capital.
Vinay Bansal, partner at Physis Capital, said, “Our biggest strength will continue to be the support we offer to our startups post investment - helping them attract good talent, build partnerships, generate revenue opportunities, strong focus on cost management and compliance, and support future debt and equity funding rounds using the deep relationships built with different stakeholders in the startup ecosystem.”