Exclusive: Aroa Ventures earmarks Rs 100 crore for investments; Stockal grabs first cheque

Exclusive: Aroa Ventures earmarks Rs 100 crore for investments; Stockal grabs first cheque
Gaurav Gulati, founder and managing partner, ScaleX Partners  |  Photo Credit: ScaleX Partners
4 Mar, 2021

ScaleX Partners has invested $1 mn in Bengaluru based Stockal as part of a slew of investments it is finalising for OYO founder Ritesh Agarwal’s family office Aroa Ventures. ScaleX is the investment manager for Aroa Ventures.

Stockal, a global stock investing platform, is in the middle of raising a $2-3 million pre-Series A round and Aroa Ventures, via ScaleX, is leading the round.

ScaleX has received an initial commitment of Rs 100 crore from Aroa Ventures. The mandate is to fully deploy the pool of capital by the middle of this year, Gaurav Gulati, founder of ScaleX, told TechCircle.

ScaleX has identified 10 startup investment opportunities and is in the final stages of closing these transactions, which would exhaust upwards of Rs 50 crore or half of the committed capital pool. 

The investments will go into startups from a range of sectors including foodtech, edtech, fintech, healthtech and SaaS.

These investments fall across the three investment buckets or stages that ScaleX is targeting — idea stage/pre revenue, early stage and growth stage.

Stockal

Founded by Sitashwa Srivastava and Vinay Bharathwaj, Stockal offers Indian investors a digital platform to invest in US stocks through its own website and through exclusive tie-ups with large brokerages and platforms such as HDFC Securities, Motilal Oswal, and Geojit. 

The capital in the pre-Series A round will be used to strengthen its technology infrastructure and launch mobile apps for growing the direct consumer base.

The wealth-tech startup had raised a couple of angel rounds in the first. It first raised capital from Helion Venture Partners CFO R Natarajan, Copal Amba founder Mohan Alexander in 2015 and later received funds from former COO and CFO of RNT capital Advisers R. Natarajan, Vikrant Varshney of SucSEED Venture Partners and New York-based investment banker and portfolio manager Amit Sinha.

ScaleX Partners

ScaleX founder Gulati was the chief operating officer at co-working space provider Innov8 when it was acquired by OYO in 2019. Post-acquisition, he worked on building OYO’s co-working centres Workspaces and later was part of the team that handled the SoftBank-backed hospitality unicorn’s asset acquisitions in the US.

During the time, he worked closely with Agarwal and helped him conceptualise and launch Aroa Ventures.

“There was a common ground. I have an entrepreneurial background. Ritesh’s OYO story is well known. Both of us have made a few angel investments as well. The startup space is very close to our hearts, so we set this platform up,” Gulati said.

Gulati also previously co-founded Purist, which was acquired by Cure.Fit, a fitness startup backed by several venture capital investors.

He launched ScaleX in July 2020 after receiving the initial capital commitment from Ritesh through Aroa.

ScaleX plans to launch a venture capital fund after the deployment of the capital committed by Aroa. The firm is currently in discussions with domestic and international investors for the fund.

“We are having active discussions with other investors, there is significant interest. However the path we plan to take is to first identify and attract the right partners and founders, back the right businesses, and show that we will be able to add value and grow these businesses. We will then start formalising other pools of capital. The thought process is that in the next 18-24 months, there will be other forms of capital funds as well,” he said.

ScaleX follows a sector agnostic approach to investments, but focuses on founders that leverage technology to enable and scale their businesses. It primarily targets pre-Series A stage where it would back startups with early revenues to take a significant minority position of anywhere between 20-30% or majority ownership. About 60-70% of the current Rs 100 crore capital pool is earmarked for early stage investments. The check size can vary from $500,000 to $3 million depending on the requirement.

A small portion of the fund, about 5%, is allocated for seed or bridge rounds in very early stage companies or idea stage startups where it sees an opportunity to drive the team to attract additional talent and have a much bigger impact if it owns a majority. 

ScaleX commits to invest any follow on capital that the business requires. The remaining is dedicated for opportunistic bets on growth-stage startups. 

“Here we look at businesses that we understand, with proven models, good momentum and have institutional investors. If there is an opportunity for us to take a small stake, opportunistically we are doing that, it’s just to balance the portfolio,” Gulati said. 

Its $500,000 investment into Sequoia Capital-backed fantasy gaming and esports platform Mobile Premier League falls under this allocation.

“The businesses that we don’t touch are those that require a burn for a number of years before they start delivering to the bottom line. We look for positive trends they need to show a very clear path to EBITA positive. We will have extreme focus on unit economics, and the financial and operational health of the business,” he added.

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