Mumbai: Filter Capital, a technology-focused investment firm, has closed its first fund, Filter Capital India Fund I, with a total corpus of INR 800 crore.

The fundraising saw participation from domestic institutional investors and family offices, contributing 60% of the capital commitment. Notable investors include HDFC Fund of Funds, SIDBI, SRI Fund, Oister Global, and DSP family office, as well as individuals such as Akash Prakash (founder of Amansa Capital) and Harsh Jain (CEO of Dream11). The remaining 40% came from international investors.

The firm aims to utilise the corpus to lead growth-stage rounds in technology-led businesses across sectors like SaaS, consumer technology, and B2B services.

Filter Capital has already allocated over 30% of its corpus across four investments in companies such as Capillary Technologies, Chalo Mobility, LoadShare Networks, and THB. The firm typically enters the Series B/C stage, leveraging data to evaluate long-term potential while avoiding overvalued businesses.

Looking ahead, Filter Capital expects to invest in 8-10 companies from its inaugural fund over the next two to three years.

With Filter Capital, the VC firm is looking for ‘pure technology’ firms, which includes enterprise software and SaaS firms leveraging new technologies like cloud-based data engineering, Generative AI, and R&D besides technology-led companies in traditional sectors like consumer, financial, and B2B.

Nitin Nayar launched Filter Capital in 2018 and Sumit Sinha joined him a year later. They both have had nearly two decades of experience in private equity investing and have worked together at Warburg Pincus. The duo began raising their first fund in 2021 and made a first close of INR 330 crore a year later.

Filter Capital India Fund I has so far invested about INR 225 crore from its corpus in four entities — enterprise loyalty software provider Capillary Technologies, bus mobility platform Chalo Mobility, e-commerce logistics services firm LoadShare Networks and healthcare enterprise software company THB.

Commenting on the fund closing, Nitin Nayar, Co-founder and Managing Partner, of Filter Capital said, “Over the coming decade, technology’s impact on the consumer and business activity in India will be tremendous. Our country has a vibrant start-up ecosystem and an active VC community to support early-stage businesses as well as deep public markets and private equity to support more mature companies. However, there are few investment firms focused on helping today’s breakout technology companies to become tomorrow’s industry leaders. This is the opportunity for Filter Capital. We are privileged to partner with a sophisticated and experienced group of investors who are aligned with our vision to build a leading technology-centric growth investment platform in India.”

Sumit Sinha, Co-founder and Managing Partner, of Filter Capital, said, “We seek to partner with capable entrepreneurs whose businesses have reached an inflection point and are poised for rapid growth. We are attracted to business models with clear product-market fit, competitive differentiation, and robust unit economics. Through our capital, networks, and expertise, we can help our portfolio companies scale and build enduring businesses.”

On the industry trend, the founders see a rise in secondary market deals in India. Recently, its portfolio firm Capillary Technologies extended its Series D round to USD 140 million, raising USD 95 million in secondary transactions to provide exits to existing investors and employees.

In the past year, growth-stage tech investor Vertex Ventures Southeast Asia and India has announced the final close of its fifth fund at USD 541 million. B Capital closed its second Opportunities Fund at USD 750 million in March.

Indian startup ecosystem had recorded a drop across multiple growth metrics in 2023 as investors grew more cautious about spending and growth without a promising bottom line and concerning valuations.

According to a Financial Express report, from USD 25.6 billion in 2022, the funding dropped to USD 8.3 billion in 2023 while funding rounds also declined to 1,133 in 2023 from 2,781 in 2022.

Article Sources – ET, MoneyControl, Financial Express, Filter Capital