At a time when investors are wary of their investments in real estate segment, early stage venture capitalist Fulcrum Venture India announced exit from Casa Grande with a valuation of Rs 100 crore making a 10x net multiple.
One of its first investments, Fulcrum Venture India invested Rs 5 crore in Casa Grande in financial year 2004 a real estate player in Chennai. Casa Grande has generated returns for the Fulcrum portfolio with a gross internal rate of return (IRR) of 54.46%.
“As a fund our focus has been on healthy cash flow generation for our portfolio companies. As with Casa Grande, we are pleased to have been a part of the company’s journey, honed and nurtured it to a size and scale where today it has developed over 1.5 million sq. ft. of land and achieved sales of Rs 94 crore. These achievements have created a profitable and timely exit for us,” said Kirshna Ramanathan, Foudner Partner, Fulcrum Venture.
Ramanathan had invested in Casa Grande even as the company was preparing its business plan. “From our first fund we have invested in five companies, and majority of them have been invested when they were still at the drawing board or preparing their excel sheets,” added he.
Some of the investee firms of Fulcrum include Curatio, The Four Fountains Spa, SwaaS Systems and Nutri Synapzz. So far the fund has invested Rs 13-20 crore into its five portfolio firms. Like Casa Grande, Fulcrum also invested in Curatio, a dermatological formulations firms in 2005. Today the company has a topline of Rs 51 crore with EBIDTA of Rs 10 crore.
Fulcrum Venture was founded in 2000, after American Remedies, pharmaceutical company founded by R K Ramanathan was acquired by Dr Reddy’s Laboratories. “As a family we decided to invest in start-ups and some of the proceeds from the sale of American Remedies was used for setting up Fulcrum. Our focus has been on angel funding,” added Ramanathan.
With fund-I closed, Fulcrum will use the proceeds from the exit of Casa Grande to form the second fund, which will focus on the early stage investment. “From Angel funding we are now moving towards early stage. I am committing at least Rs 25 crore into the second fund. We have been approached by several HNIs in Chennai. If we get that commitment I think we would then like to get a third party investor on board. We would like to have a size of Rs 60- 120 crore but this will take some time,” added Ramanathan.
The company has already invested Rs 15 crore in Richfeel Hair and Scalp. With the second fund the ticket size of investments also goes up. Ethan Khatri, principal at Fulcrum said that the ticket size will be from Rs 5 crore to 15 crore. “Till we get third party investors we will invest off our balance sheet. We are in talk two companies and will close investments soon,” said Khatri.
Fulcrum would invest for a period of five to seven years and would like to get an equity stake on 15% and higher.