After a hectic two years of dealmaking and with a whopping $10 billion at its disposal, Alpha Wave has emerged as the largest propellant of the latest technology bull run in India, which is now coming to an end.
The capital’s ten-year pool was shored up by Alpha Wave, a New York-based . originated from Tiger Global ManagementIt is the largest globally for a technology fund, with India at its center.
Navroz Udvadia, co-founder and partner, Alpha Wave Global, said the fund has great flexibility, which gives it a “competitive advantage” over others.
“Funds of this scale, flexibility of mandate (early stage, late stage) and this duration (10 years) give us significant competitive advantage,” Udvadia told ET in a rare media interaction. Talking about Alpha Wave Ventures, he said, “Thanks to our public-private market focus, we realized growing risks several months ago and significantly slowed our investment activity and, therefore, the vast majority of funds are yet has not been deployed.” II and hesitation among technology investors.
Jointly managed by Alpha Wave and Abu Dhabi’s Chimera Capital, the fund’s massive war chest and aggressive moves have attracted the attention of domestic startups as it has grown during the COVID-19 years, buzzing with the likes of Cred, Swiggy and Internet companies is facing large financing rounds. Dream11 among many others, as
ET had elaborated on this in its May 19 report last year.
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According to data from London-based Prekin Pro, last year the fund made 36 deals, compared to 16 and 11 in 2020 and 2019 respectively. So far this year it has been part of 22 funding rounds.
Alpha Wave’s fundraising comes at a time when the technology world is gearing up for one of its toughest phases as investors issue warning notes to their portfolio companies – something that startups haven’t seen for a few years because of the abundance of money. Capital was readily available in quantity.
Udvadia said keeping in mind the slowdown, the fund will try to place more bets in the initial phase, as others like Tiger Global are doing in India.
“While we are open for business, we are going to focus a lot on our portfolio first,” he said. “After that, we’ll only see rare, outstanding businesses where we not only see a real competitive gap and differentiation, but also high quality founders available at a reasonable price. By definition, I think we’re on an earlier occasion. Will focus more.”
After witnessing devastation in US public markets since December last year, the fund was quickly turned around. Typically, private technical valuations lag behind public markets by four to six months. Udvadia said Alpha Wave slowed down its capital deployment “quickly and hard.”
“We are fortunate to be in a position where our capital was raised and closed in December 2021 and January 2022… So, now we have the opportunity, provided we maintain our discipline, to invest in really reasonable, sensible companies. Look for opportunities. Prices,” he said. “We think the recovery in the private market is still in its infancy – (there is) much more to come, and therefore, patience is key.”
Go fast
This is quite different from the fund’s approach two years ago, when it promoted tech investments in India. Armed with primary sponsorship from the Sovereign Wealth Fund of Abu Dhabi, such as ADQ, 2019 is when the fund began to go aggressive. Udvadia declined to comment on its limited partners (LPs) or sponsors for the new fund.
“While we do some Series B rounds, they almost always happen when we are already on the cap table. We have established ourselves firmly in the seed and Series A ecosystems, and that’s incredibly rewarding for us. That we are truly a firm and a culture that loves building business with our founders,” he said. “On the other side of Barbell is our growth business where we seek out excellent founders who share a competitive moat and solid unit economics. to manage major businesses.”
Udvadia said the early going strategy is something that Alpha Wave will accelerate. While Alpha Wave Venture II will continue to cut checks of $50 million to $300 million, it will place more bets in India, the US, Israel and Europe at an early stage.
In recent months, it has closed initial rounds in wealth management firm Wealth, live video infrastructure startup 100ms, and offline-to-online neighborhood store network 1K Grocery, which is investing in a funding round of less than $30 million. Is.
India’s largest market
Alpha Wave has established teams in Israel and now has ten officers in its Bengaluru outpost, which is its largest team globally. It also has a presence in New York, London and Miami. “Europe, the US, Israel and India are the main focus areas,” Udvadia said. “We have expanded our physical and intellectual footprint, hiring not only investment professionals but dedicated industry veterans who spend all of their time working with our founders, helping them in sales, marketing, product marketing, and more. Helps in getting fit, hired, and more.”
Founded by New York-based Rick Gerson and London-based Mumbai-born Udvadia, Alpha Wave began life in India in 2012 by backing a mix of public and private market companies. Today, it has more exposure in private companies than in public ones.
“In 2014, my co-founders, with utmost discretion, made a fundamental decision that our rigorous due diligence process, discipline around behavioral finance, global relationships, and the ability to source off-the-run assets for private market investments was strongly suited, and we cautiously expanded our private business,” said Udvadia. “Our private investment activity operates under the Alpha Wave Global brand. Today, noting that we are now largely a private market -focused investment firms, with some public market investments, it makes sense to re-brand themselves to adopt through Alpha Wave Global.
Begin your India journey with an investment in
, Alpha Wave (then Falcon) placed bets on publicly listed firms here. On the private tech side, its first investment was in ride-hailing major Ola in 2014. But the fund was not the most active in the market for the next few years, as we detailed in our May 19, 2021 report – Behind the Falcon. Edge’s strategy of frantic bargaining in India.
but do study more: Behind Falcon Edge’s frantic bargaining strategy in India
“India’s performance in the last 10 years has been great,” Udvadia said. “It has been a beneficiary of easing global central bank policy and massive structural reforms in governance and ease of doing business. Now we are going into a difficult arrangement for India. Rising crude oil prices, rising inflation, supply chain shocks, a strong USD. We still respect the structural tailwind, but we are polite and respectful in the face of the macro cycle. ,
Alpha Wave’s portfolio firms such as Ola and Lenskart were preparing to tap the public markets this year. However, considering the macro headwinds, most have put their plans on hold.
“We do not invest in the form of pre-IPO arbitrage. So, the window for IPOs closes and opens as the market cycle goes up and down, but we don’t time it or rely on it while investing,” Udvadia said. “Going public can be beneficial for some companies, but we avoid situations where our return on investment (ROI) is needed.”