Elevation Capital has announced the opening of a new fund, Elevation Holdings, which is a $400 million fund that represents a major shift in investment strategy. The venture capital firm is also traditionally recognized to make early-stage investments in the Indian tech and consumer market, but is currently targeting late-stage investments, especially in technology-based consumer and financial services. The action follows a period when the environment in India has been constrained by the global economic headwind and investor caution as the country has entered into the later phases of funding. Elevation Holdings intends to fill this gap by supporting companies that are either profitable or will be profitable in a period of three years.

Debut investment and fund plans

Elevation Holdings has already conducted its initial investment and is a participant in a $170 million round of funding in Spinny, a used-car platform. The company has a strategy of making investments in companies that are on the verge of going into the IPO and being engaged after this. This long-term strategy is similar to the idea of Elevation giving out permanent capital, as termed by co-managing partner Mukul Arora. With its continued investment in companies even after the IPO round, Elevation aims to help companies transition into the public markets, providing them with stability and strategic direction during one of their most vulnerable growth periods.

The fund will seek to invest in 10-15 companies, keeping a very selective portfolio. The check amounts will be between $20 million and $50 million, and Elevation will be able to impact the growth path of each company significantly. The focus strategy is aimed at maximizing impact and, at the same time, ensuring a strong involvement with every portfolio company. The focus of Elevation on profitability and sustainable growth is contrary to the previous generation of venture capital, which focused on high growth and market share gain at the cost of unit economics.

Work of Elevation Holdings

In 2011, Elevation Capital was established as SAIF Partners India. The company started by investing in the early stages and created a portfolio that consists of such popular brands as Paytm, Swiggy, and Urban Company. In 2020, SAIF Partners renamed itself Elevation Capital, and this indicated a more expansive strategy. Two years later, it introduced Fund VIII with a corpus of $670 million to speed up collaboration with category-defining early-stage companies. Elevation Holdings is the next step in this development, and it extends the presence of the firm into the later phases of the startup life cycle. This two-track approach will enable Elevation to work with companies at start-up, IPO, and other levels.

The demand for scalable and profitable business models is increasing with the increasing number of consumers using the web platforms to access financial services, e-commerce, mobility, and other digital solutions. Startups in fintech and consumer technology in their late stages are currently in search of investors that can offer not only capital, but also strategic support before IPO. Elevation Holdings stands out in uniqueness to fulfill this demand. Its long-term investment approach is a challenge to the existing model of short-term venture returns, which is to focus more on long-term sustainable operations when starting up than on aggressive growth.

Funding gap and implications

The Indian technology industry has seen a decline in late-stage funding in the past years. Global geopolitical tensions, especially the poor relations between the US and India, have been some of the factors that have led to low capital flows. It is within this setting that Elevation Capital is getting a chance to invest patient capital into businesses whose business models and operations are proven and can scale.

The new fund of the firm is placed to come in to fill the lack of finance experienced by startups that have the potential to scale, but they are unable to access long-term, strategic investors. An orientation on fundamentals and profitability is expected to make Elevation develop a disciplined use of capital and a healthier financial set of metrics throughout its portfolio.

The move by Elevation to indulge in late-stage investing may have wider ramifications in the Indian technology ecosystem. The firm can also seek to encourage more foreign investment by supporting those companies that have strong fundamentals, by remaining in the company through the IPOs, since international investors tend to follow those that have strong knowledge in the sector and those whose exit history has been positive. Such an inflow of capital might boost liquidity in India’s public markets and a healthier technology listing environment. Finally, Elevation Holdings strives to trigger a third generation of startups of discipline and high quality that will enter the public space.

Conclusion

The $400 million late-stage fund Elevation Capital launched can be designed to represent a fundamental change in its investment philosophy and a step-timed intervention in the maturing ecosystem of startups in India. The support of a company with good fundamentals, clear paths to profitability, and IPO potential makes Elevation Holdings an ideal cornerstone investor in the next tech-driven growth. Its long-term investment and post-IPO support not only bridge a significant capital divide but also create a new paradigm of investing in venture in India, where resiliency and scalability are a priority, as well as long-term value creation.