Venture Capital Firm Kalaari Capital Gains over $600 Million in 2021

The Limited Partners (LPs) of Kalaari Capital, a venture capital firm, gained more than $600 million in 2021 alone after the business exited from roughly ten enterprises, partially or totally.

Vani Kola, the founder and managing director of Kalaari Capital, stated, “we have had about 8-10 solid exits this year, some larger than the others. I think a couple of our funds have returned over 2X the capital raised, and still have significant portfolio holdings in them. I expect that most of our funds will offer somewhere between a 4X to 5X return in total distribution over time.”

In 2011, Kalaari Capital created a fund that has since proven to be its top performer in terms of returns. According to Kola, another opportunity fund, which was formed in 2016, continues to provide strong returns to its investors. Reliance Industries is among the LPs of the VC company, which is now investing from its fourth fund.

Approximately 40-45% of the fund has been deployed to date, according to Kola, and the VC firm needs to give follow-on funding to start-ups.

Kola's remarks come at a time when Indian entrepreneurs have seen record fundraising from both international and local venture capital (VC) and private equity (PE) firms, in a year that has so far produced 42 unicorns, or privately-held companies valued at over $1 billion.

So far this year, Kalaari Capital has invested $75-90 million in 22 investments, placing it among India's most active private market investors. This year, the early-stage VC firm partially exited a number of its top portfolio firms, including Dream11, Simplilearn, MilkBasket, and Shop101, among others, delivering good profits for its LPs.

The venture capital firm's biggest accomplishment to date has been a partial exit from Dream11, a fantasy sports firm owned by Dream Sports. Kola said the VC had repaid as much as $206 million to its LPs in a LinkedIn post dated 1 April 2021, without providing any specifics.

This year, Kalaari Capital made its first investments in a number of areas, including fintech, ecommerce, SaaS (software-as-a-service), and non-financial-transactions (NFTs) (non-fungible tokens). Kola claims that the VC company is still positive on these industries.

Kola added, “we invested in these deep-tech companies, because there’s this growing tsunami in the services industry, to the product industry, to emerging technologies and IP-based companies. These are things which we could not do for two to three years. I think largely put, all this is bringing this digital transformation, and social behavioral shift in's representing that in a microcosm.”

Kalaari Capital, according to Kola, will investigate other sectors in the near future, in addition to established ones like retail and infrastructure, in which the VC firm has never ventured. Kola underlined, “there are several things we don't invest in, such as traditional retail or infrastructure, because our focus is on tech-led innovation. In that sense, we will look at everything right now. We might believe in certain models or we might not when we actually meet them, but there is no sort of blacklist that I have.”

B2C (business-to-consumer), edtech and education, fintech, agritech, and food delivery, according to Kola, will continue to be "sunrise themes" in the years ahead, even if the business models of certain companies in these areas shift.

Kalaari Capital has invested in, an NFT platform, and Kola believes that a regulatory framework for crypto and blockchain technologies is urgently needed in India. She asserted, “many other countries have done that (regulatory framework), and I think it’s important, given the economic implications at many levels. By our estimate, (Indian) NFT companies this year alone have raised over $600 million in venture funding, but they're putting the company in Dubai or some other jurisdiction to be able to do that, because they can't do that here. I think we should enable that, and so I think we have to sort of create a thoughtful, regulatory clarity soon on allowing startups to build from here. We have a large blockchain developer group in India, which recently even Mark Zuckerberg and Mukesh Ambani spoke about.”

The venture capital firm recently established CXXO, a programme that aims to invest in woman firms. According to the program's website, the program's objective is to level "...the playing field for women founder-CEOs in shaping India’s digital future by creating exponential value in the economy". Kalaari Capital has earmarked $10 million for the programme, and backed three firms till date--Samosa Party, kindlife and Creative Galileo.