Keeping up with the Joneses is not just for lesser mortals. Mighty financial firms scramble to catch up too.
It's a phenomenon that's become more pronounced in the liquidity-crazed market of the past couple of years. Blockbuster listings and outsized gains on big new-age bets by the likes of Sequoia and Tiger Global seem to have induced major FOMO among many others in the financial world.
The bandwagon has gotten bigger, with not-so-usual suspects also joining the startup investing march now. It's showing in the numbers—venture capital and private equity investments in Indian companies in 2021 were over $50 billion, the highest ever.
One of them is India Infoline (IIFL), the protagonist in our article today - the initial workday of the week. The financial services group is better known for its wealth management, shadow banking, and Equity broking firm. But unknown to many, its nearly $700 million late-stage tech fund set up in late 2020 has already deployed 60% of the corpus in 17 companies.
It's an impressive portfolio, which includes names such as Byju's, Swiggy, Licious, Pine Labs, and HomeLane. "We want to be at the intersection of the best of the VC world and growth-stage PE funding,” says IIFL Asset Management Company’s (AMC) who runs the fund. This, while keeping an eye on profitability.
IIFL is not alone. Its rivals in conventional asset management, Kotak and Edelweiss, have also thrown their hat in the startup investing ring. Demand from wealth management clients seems to be driving the trend.
"When the music stops, in terms of liquidity, things will be complicated. As long as the music is playing, you've got to get up and dance. We're still dancing," Citigroup's former chief executive Chuck Prince had said before the global financial crisis hit in the late 2000s.
Prescient words for the present times too. For now, though, the party goes on. As a startup founder puts it, "This is not money you can ignore anymore."