NEW DELHI|MUMBAI: New York-based private equity firm General Atlantic will back more Indian consumer technology startups as it looks to evaluate companies in early stages, a top executive at the fund said, in keeping with its recent bullishness on the sector.

One of the top firms in the PE industry, General Atlantic manages $35 billion in assets across the world, and has been among the rare growth-stage funds to make several bets on fledgling companies in the domestic technology space even as most peers steered clear of these high-burn and steeply valued companies.

Sandeep Naik, the managing director and head of India and Southeast Asia, told ET in an exclusive interview that the firm will begin evaluating companies early on and invest anywhere between $25 million all the way up to $500 million in one company. The firm will evaluate more companies at early stages than it has done previously, as part of its global focus on what are described as emerging growth companies.

Over the past year or so, GA – as it is commonly known in the industry – has backed educational technology company Byju’s, online learning platform Unacademy and real estate portal NoBroker, and will explore more such opportunities as consolidation kicks in and valuations soften.

This is a vastly different approach from earlier towards the fast-growing technology sector.

Not very long ago, the fund had come close to backing the likes of Flipkart (acquired by Walmart) in its early days, and Zomato a few years ago, but eventually refrained from biting the bullet.

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GA-graphic

“Historically, we intentionally stayed away from consumer technology in India. It was a deliberate play, as the unit economics of the business were not correlated to the valuations. For the majority of the past 7-8 years, consumer tech companies burned capital to acquire customers and get them to adopt their offering,” Naik said.

“Our diligence indicated that customers showed up, but they were only chasing subsidies and deep discounts versus quality of the offering or convenience, which further deteriorated the unit economics of the business. However, due to a breakthrough in disruptive pricing, the cost of data has lowered for consumers. That’s when we identified Byju’s.”

Gains on Byju’s key

The firm recently ploughed fresh capital into Byju’s and NoBroker, even as many in the industry said the continued bets stemmed from the exponential valuations it saw in Byju’s since its first cheque in Byju Raveendran’s firm in 2018 when it was valued at a shade over $5 billion. Byju’s is currently valued at $10 billion.





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