The group funds VCs makes direct investments in businesses, and participates in secondary deals when an investor wants to exit. It issues checks ranging from $1 million to $150 million.
Zepto raised $200 million this week at a valuation of $1.4 billion, a rise of 55% over its worth a year ago. The transaction represented the StepStone Group’s first direct investment in India as well as the end of an 11-month unicorn drought.
Partner at the US asset management company Ashton Newhall told Moneycontrol that StepStone is enthusiastic about chances in the third-largest startup ecosystem in the world and that it has a long history of investing in India.
The StepStone Group, a limited partner in a firm that oversees assets of over $140 billion, has indirectly invested in Indian companies. The organization, which operates more than 20 offices worldwide, supports well-known venture capital firms like Nexus Venture Partners and Lightspeed.
Newhall has previously served as a board member for Bessemer Venture Partners. The StepStone Group is a limited partner in Lachy Groom and other companies, some of which support Zepto, along with Nexus.
Startups in the fields of e-commerce, software-as-a-service (SaaS), and artificial intelligence are particularly significant in India for StepStone, which issues checks ranging from $1 million to $150 million. When an investor wishes to depart, the organization participates in secondary deals, finances VCs, and makes direct investments in businesses. The startup ecosystem in India has a lot to offer.
In India, a specific blend of factors results in exceptional enterprise outcomes. The founders are undoubtedly one. Their skill set is the second factor. The third is the necessary financial resources to help them realize their goals; India has always possessed very special characteristics in each of those areas. We are therefore quite excited about the venture investment opportunity in India for a variety of local and macro reasons, according to Newhall.
Direct connections
Banking on StepStone’s ties with VCs, “we are very hopeful that we can continue to build our direct investment relationships as well,” he said.
Last week, StepStone invested $75 million in Zepto alone. The wager is made as Dunzo, a well-known quick-commerce business in India, struggles with a serious financial shortage. Startups in India were not the only ones facing difficulties.
Instacart, a San Francisco-based company that had a valuation of $39 billion more than two years ago, reduced it to $10 billion in December 2022 as it prepared to go public. Despite these incidents, which occurred both internationally and in India, StepStone continues to support quick-commerce businesses.
“The methodology that Zepto uses is a highly special opportunity and needs money to accomplish their goals. We’re excited to work together, Newhall remarked.
Aadit Palicha and Kaivalya Vohra, both under 25, launched Zepto, which has attracted top executives from all sectors of the market. The Mumbai-based company redesigned its top deck in May to reach EBITDA-level profitability in a year and then pursue an IPO in the first half of 2025.
These markets may take some time to develop. There are former executives from Uber, Flipkart, Zilingo, and Myntra on the management team of Zepto. The management team is quite exceptional, and we have faith that they will provide the desired results, said Newhall.
Not only in India
The governance flaws that have dogged Indian businesses are known to StepStone.
To some extent, that happens constantly in all marketplaces around the world, according to Newhall. Sadly, negative things will always occur. And we need to look for the proper individuals who, in the end, are uncommon outliers and produce exceptional outcomes.
It was said that several mistakes were made as a result of investor pressure and the desire to meet results.
The reality is that not all organizations are linear as they attempt to move from point A to point B, according to Newhall. “In a culture where there is an intense desire to put up high growth figures,” he said. “The biggest thing we sometimes see is just a lack of transparency about that reality.”
