Former Tiger Global fund manager Lee Fixel—known for making the VC firm’s biggest investments in Indian consumer internet startups—has cut a USD 76 million check for Gurugram-based logistics startup Delhivery from his new venture firm, Addition.
This is Addition’s second investment in the country, which comes a year after Fixel made his first bet in India on online news aggregator Inshorts’ location-based social networking platform Public.
Delhivery has allotted 146,961 Series I compulsory convertible preference shares to Addition at a price of INR 37,900 (USD 517) per share, said a report by local media Inc42 on Tuesday, citing regulatory filings.
Notably, Fixel had invested in both—Delhivery and Inshorts—back in 2015 for Tiger Global. New York-headquartered Addition has backed almost five dozen startups since its inception in July 2020, but its pace of investments in India has been snail-like. According to a report by Financial Times, Addition began raising another USD 1.4 billion fund in October 2020, less than four months after closing its first USD 1.3 billion fund.
The development comes at a time when Delhivery has reportedly begun the groundwork to list its shares in public markets early next year to raise around USD 500 million.
Started in 2011 by Sahil Barua, Mohit Tandon, Bhavesh Manglani, Suraj Saharan, Kapil Bharati, and Bhavesh Manglani as an express delivery partner for restaurants, Delhivery shifted its focus to catering to e-commerce shipments within the first six months. Over the last decade, it has become one of the dominant players in the e-commerce logistics space, having completed over one billion shipments. The company claims to currently work with 17,000 customers, including e-commerce firms and SMEs, serving about 19,500 neighborhoods across 2500 plus cities.
In May 2021, Delhivery landed a USD 277 million check from marquee investors like Fidelity and GIC at a valuation of USD 3 billion. Barely two months later, it raised USD 100 million in strategic capital from FedEx Express, a subsidiary of global logistics solutions provider FedEx Corp. Prior to these two rounds, the company had raised capital almost two years ago—a USD 413 million round led by SoftBank Vision Fund, which catapulted the startup into a unicorn. So far, it has raised USD 1.4 billion in fund, including the most recent round.
Fixel’s India connect
In 2010, Fixel came to India as Tiger Global’s managing director and started writing checks for new e-commerce startups like Flipkart, which was then a book-selling platform, online footwear and clothing store Myntra, and Mom Supplies, which ran babyoye.com.
But it wasn’t until May 2014 that the American hedge fund went on an investment frenzy. Fixel reportedly pumped in more than USD 1.5 billion in over two dozen startups over the next 18 months, betting big on India’s internet story. Tiger Global’s aggressive investments, according to a Mint report, led to a funding boom for startups, as other investors like SoftBank Group, Sequoia Capital, Accel Partners followed suit. During this period, valuations of Indian internet startups saw a meteoric rise.
That story didn’t quite turn out as Fixel had expected. Unlike consumers in China, millions of Indian consumers, who were coming online on the back of increasing smartphone penetration, did not spend as much money as VCs had imagined. Thus, the consumer internet market in the world’s second-most populous country was not growing fast enough.
By the end of 2015, Fixel froze startup investments in India, a move that was again replicated by the larger VC community, which resulted in a funding crunch in 2016 and 2017. Compared to USD 6.6 billion in funding raised by Indian startups in 2015, the homegrown companies attracted USD 4.8 billion and USD 4.7 billion in 2016 and 2017, respectively.
During those two years, Tiger Global sold some of its shares in Flipkart and Ola to SoftBank Group. Two other portfolio companies, jewelry retailer CaratLane and online music platform Saavn, were also bought out by Indian conglomerates Tata and Reliance, respectively. With these exits, Fixel earned close to USD 1 billion for Tiger Global. In 2018, when American retailer Walmart acquired Flipkart for USD 16 billion, the exit gave the VC firm a return of USD 3.5 billion.
Fixel quit Tiger Global as a partner in June 2019 after 13 years. After leaving the firm, he started the process of launching a billion-dollar fund, Addition, which he rolled out as soon as his non-compete agreement with his former employer expired in July 2020.
With Addition, Fixel is looking to back multi-stage startups. He kicked off his investments in India in September 2020 with Inshorts—the same time his previous employer, Tiger Global, was stepping up its game in India under Scott Shleifer, who took over Fixel’s position after his departure.
Tiger Global—the top VC firm in the country in terms of deal value last year—has already turned 11 startups into unicorns in 2021, including fintech firm BharatPe, conversational messaging startup Gupshup, social commerce startup DealShare, home service platform Urban Company, and wealth tech firm Groww, and e-grocer Grofers.
A report by local media Economic Times said while Delhivery is Fixel’s second Indian investment from Addition, he has been putting his personal money in several local early-stage startups, but those investments have not been officially announced.