Physis Capital, a growth-stage investment fund, has recently announced the first close of its $50 million fund at $7 million, with a final close expected in 2024. This fund aims to invest in 15-20 start-ups, with an average ticket size of $2.5 million, and intends to commence its investments in the third quarter of this year.
The announcement from Physis Capital comes at a time when the Indian start-up ecosystem is experiencing a funding slowdown. According to data from Tracxn, start-up funding in the first quarter of 2023 witnessed a significant decline of 75% year-on-year, amounting to only $2.8 billion. However, Physis Capital remains optimistic about the opportunities presented by the current economic cycle.
Ankur Mittal, a partner at Physis Capital, highlighted that experienced investors recognize the potential in identifying promising businesses during economic downturns. He stated, “Smart money understands that downturn economic cycles are the best times to identify great businesses and invest in them.” Mittal further emphasized that Physis Capital has received substantial interest, particularly from new investors, who are impressed by the fund’s track record.
Physis Capital aims to create a well-rounded portfolio by investing in start-ups at the growth stage, specifically those seeking Pre-Series A to Series B capital. The fund’s focus is on identifying companies with solid business models that are capable of generating sustainable returns in the long run. By providing an average ticket size of $2.5 million, Physis Capital aims to support start-ups in scaling their operations and achieving their growth objectives.
While the majority of funds raised by Physis Capital thus far have come from Indian investors, including high-net-worth individuals (HNIs) and family offices, the fund has also attracted significant interest from international investors. Mitesh Shah, a partner at Physis Capital, highlighted the growing interest from investors across multiple international locations, such as Singapore, the USA, and the UAE. Additionally, Physis Capital is in the process of raising funds from institutions and preparing for deployment.
Vinay Bansal, another partner at Physis Capital, emphasized the fund’s commitment to supporting its portfolio start-ups after investment. This support includes assisting start-ups in attracting top talent, forging strategic partnerships, identifying revenue opportunities, and maintaining strong cost management and compliance practices. Bansal also mentioned the fund’s ability to facilitate future debt and equity funding rounds through its extensive relationships within the start-up ecosystem.
In conclusion, Physis Capital’s announcement of its $50 million fund, with a first close of $7 million, signifies its commitment to supporting growth-stage start-ups in India. Despite the funding slowdown in the Indian start-up ecosystem, Physis Capital remains optimistic and believes that economic downturns present opportunities to identify and invest in exceptional businesses.
With a focus on companies with solid business models, Physis Capital aims to build a diverse portfolio and provide ongoing support to its invested start-ups. The fund’s success has attracted interest from both domestic and international investors, reflecting its reputation and potential for generating sustainable returns in the long term.
