The Mumbai-based firm, which has invested in MobiKwik, PharmEasy, and Country Delight, among others, is open to all sectors including software-as-a-service (SaaS), agritech, and healthtech, as it doubles down on early-stage startups with cheque sizes of $1-2 million, Sukhmani Bedi, a partner at Orios, said in an interview.
So far, almost half of the $150 million fourth fund has been invested in startups including climate-tech firm Varaha and fixed-income lender Lendbox.
“We want to finish deploying from the current fund by early next year and start fundraising for the fifth fund by June 2025. We’ll continue focusing on the domestic ecosystem because we have faith in India’s consumption story,” Bedi said.
While the size of the fifth fund may change based on interest from limited partners (LPs), Bedi said $150 million-200 million is a good number to generate strong multiples.
“We have seen some funds get large cheques from LPs and looked beyond the Indian markets to generate hyper returns. But as a domestic fund, we know that a fund size of $150-200 million is sufficient to invest in the Indian ecosystem to generate good returns,” she noted.
Abundant opportunities
Orios launched its first fund in 2014 and closed it at ₹300 crore the following year. It backed 18 companies including dairy startup Country Delight, e-pharmacy company PharmEasy, and shared accommodation firm Zostel. The fund is said to have returned 1x to its LPs and increased returns are expected in 2024 and 2025, it said in January.
“Looking back to Fund I, we can see that opportunity for startups has grown manifold. Tech has reached across India and into the hinterland. It has gone beyond consumer internet to B2B, SaaS, EVs, climate-tech, and to hardware,” Rehan Yar Khan, managing partner of Orios, had said.
In 2021, Orios set up an opportunities fund of $30 million to re-invest in emerging winners such as Country Delight and PharmEasy.
Orios’s fourth fund was rolled out shortly after two partners, Anup Jain and Rajeev Suri, moved out. Given the seniority and importance of the roles, the firm will look to hire replacements soon, according to Bedi.
Recently, Orios faced turbulence after portfolio companies GoMechanic (founder admitting to financial misreporting) and PharmEasy (massive drop in valuation) stirred chaos. However, Bedi said these incidents led the firm to evaluate its portfolio companies more carefully and put stricter emphasis on corporate governance.
“In the middle of two funding rounds, we now do more frequents audits than we did before,” Bedi said.
Quick commerce support
Over the past few years, ‘building from India for the world’ has emerged as a major theme attracting investors, especially in technology-centric sectors like deep tech and climate. However, Orios wants to stick by its thesis of supporting domestic startups, especially those that are solving problems pertinent to the country, Bedi said.
“While we will look closely at cross-border startups and SaaS bets that have global interest at play, we don’t want to jump into anything because of FOMO (fear of missing out),” Bedi added.
According to Bedi, India’s evolving consumption patterns led to the phenomenal growth of quick commerce, proving the initial premise of many venture capital investors wrong. Quick commerce grew 10-fold from 2021 to 2023, driven by the need for convenience by urban consumers, according to a report by JM Financial.
However, instead of investing in quick commerce companies, Orios will look at backing associated entities such as logistics companies and technology-enablers, both as part of its current fund and the next fund, Bedi said.