Pants to payments: Sorin Investments sharpens focus for its ₹1,350-crore fund

The company is in advanced talks to lead the Series A round in The Pant Project, a D2C firm that sells custom-made pants, with an investment of ₹32-36 crore. The company is also exploring deals in the software-as-a-service (SaaS) sector. The Pant Project did not immediately respond to Mint's request for comment. 

While Sorin’s core investment areas also include SaaS, health tech, and consumer internet, it’s not restricted to these sectors. 

“These sectors, where we see a large opportunity driven by high-quality deal flow and the potential to build large businesses, will comprise the bulk of our portfolio, but we will not ignore other sectors," Mandar Dandekar, founding member and partner at Sorin, told Mint in an interview. 

Dandekar’s previous roles include a decade-long stint at VC firm Kalaari Capital and at Tata Capital Innovations Fund, where he led investments across sectors and geographies. 

Sorin, which launched a ₹1,350-crore fund last month, typically invests ₹25 crore to ₹60 crore in companies at the Series A and B stages. It will use 60% of the fund for new investments and the rest for follow-up rounds. Companies it is currently invested in include Uniqus Consultech, Venwiz, Litestore, Freed and Shivalik SFB. It also did a follow-up round with Uniqus.

“We look for fundamental things like how strong the team is, the size of the market, the potential to compete through a differentiated business model or technology, the sustainability of the model and its unit economics," Dandekar said.

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When Sorin was founded two years ago, there were ample opportunities for early-stage investments with many interesting businesses and brands coming up, Sorin’s founder Sanjay Nayar said. “Starting out as an early-stage fund made more sense to us, but I think we will also do later-stage investments in the longer run." 

Nayar was previously with private-equity firm KKR, where he served as the CEO, and has been on the boards of various KKR portfolio companies. He has also held senior positions at Citigroup. 

During the pandemic, several companies had to rethink their business models and pivot to products that were more sustainable in the long run. While it takes time to build a business, not all companies were able to generate the returns that fund managers wished for, causing some to exit with lower gains than expected. 

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“While it is too early for us to think about exits and liquidity, I think founders themselves will realise that not all startups can become unicorns or get to the end goal of an IPO," Nayar said. 

Sorin partner Subeer Monga said, "I think capital will always chase returns and a good founder will find a way to create a profitable business,". Monga, who joined Sorin recently, previously worked at ICICI Ventures and also had a 13-year stint at Mayfield India.

New VC funds bloom

Several venture capital firms have seen high-profile executives leave to start their own funds of late. These include Nexus Venture’s Sameer Brij Verma, Lightspeed’s Vaibhav Agrawal and Peak XV’s Piyush Gupta, who are all looking to start new ventures, according to media reports.

The creation of new funds, Nayar said, shows there is immense appetite to build businesses in India with local money. “India’s local funds currently are a fraction of the size of those in China. If we want to be more self-reliant, I think it is time to tap local savings by addressing the domestic talent and needs within the country," Nayar said.

Sorin received 90% of the capital for its fund from India, and key limited partners included the Nayar family office, Banga family office, Munjal family office, and Self Reliant India. 

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Nayar added that the Indian government has also catalysed the growth in the startups ecosystem. “To build real businesses takes time, and with money coming in at more sensible valuations, I think it is a good time for us to be here," he said. 

Monga added that as the economy grows and people’s purchasing power increases, innovative products will be built in India at competitive prices, which will then be exported to other countries. “There will be greater efforts to solve problems for consumers and businesses domestically, as well as businesses that cater to the theme ‘from India for the World’."