Welcome to our ‘Fund in Focus’ series where we profile our member VC funds, underscore their investment philosophy, and highlight some of their interesting work. Today we speak to Vijay Iyer, Partner at Merisis Venture Partners Fund who highlights Merisis focus on co-investing with top venture capital firms at growth stages, enabling risk-mitigated returns for its LPs. The manager also elaborates on sector preferences, successful co-investments, and the fund’s strategic advantage in India’s evolving growth-stage investment landscape. Additionally, the importance of Merisis extensive network in facilitating timely exits is underscored, showcasing the fund's comprehensive approach to value creation.
Fund In Focus: Merisis Venture Partners on Building a Strong Exit Strategy in Growth-Stage Investments
Vijay Iyer, Partner,Merisis Venture Partners Fund
Spokesperson: Vijay Iyer, Partner,Merisis Venture Partners Fund
1. Can you elaborate on the fund's investment philosophy and how it aims to generate superior risk-mitigated returns for its LPs?
The investment philosophy of the Merisis Opportunities Fund focuses on co-investing with prominent venture capital firms at a stage where the company has achieved product-market fit and is in a growth-oriented funding round. This approach inherently mitigates risk for our investors due to both the stage of investment/similar entry point and the credibility of the Venture Capital firms on the cap table. Additionally, we strategically pursue opportunistic investments by taking small allocations in bridge rounds when company valuations are particularly attractive. Furthermore, our deal-by-deal drawdown strategy enhances the internal rate of return (IRR), as capital is deployed in investment opportunities at varying intervals.
2. Could you explain the rationale behind co-investing at Series A/B stages alongside leading VCs? What benefits does this strategy offer to both Merisis and the portfolio companies?
Merisis maintains robust relationships with venture capital funds, and our co-investment opportunities are influenced by the quality of Venture Capital Funds participating in each funding round. We prioritize co-investing with funds in whom we have high confidence, based on their proven track record and strong domain expertise. These funds are also evaluated for their effective support of portfolio companies in subsequent funding rounds. This approach provides us with validation and confidence in our investment decisions. Once a company becomes part of our portfolio, we leverage our sectoral expertise and market intelligence to offer insights into the funding landscape and facilitate connections with potential investors for their future funding needs.
3. Can you share an example(s) of a successful co-investment?
To date, we have co-invested in seven companies. Notably, our initial investment, BeatO, has successfully secured a Series B funding round with prominent venture capital firms, including participation from all existing investors. The continued commitment from existing investors in this follow-on round enhances the confidence of new investors as well as LPs, thereby strengthening their confidence & willingness to invest in these portfolio companies.
4. While the fund is sector agnostic, you have shown a preference for Enterprise, FinTech, D2C, and HealthTech. What drives this focus, and how do these sectors align with your investment goals?
Our investment philosophy is grounded in a deep understanding of our target sectors. We possess extensive domain expertise via our Investment Banking practice across sectors like Enterprise, Transportation, Healthcare, Fintech, and Consumer/Tech. Our investment thesis is closely aligned with this expertise, focusing on new-age digital companies within these five sectors. These companies leverage technology to tap into large, high-growth markets, which in turn helps us to unlock the target IRR to meet our investment goals.
5. How does Merisis’ extensive network in the “Exit Ecosystem” provide a unique edge in executing prompt exits? Can you share any recent success stories?
Merisis investment team meets potential stakeholders viz late-stage fund, Secondary market funds, Corporate Development/M&A desk of large listed and unlisted companies in the sector. During the process they understand the road map and business plans of the stake prospective buyers. This information will be very useful whenever the fund decides to exit any investment. Our first investment is little over 2 years old and we are still invested in all our portfolio companies.
6. How do you see the growth-stage investment landscape evolving in India, and what role do you envision for Merisis Advisors in this transformation?
The growth stage investment landscape in India is evolving, with investors increasingly prioritizing profitability alongside innovation. Both founders and investors are now seeking collaboration with domain specialists for strategic decisions like Investments or M&As. Merisis has adeptly positioned itself to meet this shift by developing substantial expertise across specialist teams focused on various sectors.
Moreover, there is a growing interest from investors in traditional promoter-led businesses, which were previously considered less attractive. This trend is expected to drive significant market consolidation, either through acquisitions by major industry players or investments from private equity firms.
Merisis, with its proven track record in M&A, is exceptionally well-equipped to unlock value in this market. Our strength lies in our comprehensive domain knowledge, market intelligence, extensive network, and the robust experience of our leadership team, which spans multiple industries. As a group, Merisis has also expanded into wealth management to cater to founders across various stages of their company lifecycle and journey.