Amazon Smbhav Venture Fund (ASVF) is a $250 million fund focused on startups that enable the digitization of India’s small and medium businesses. While ASVF began with an initial focus on agriculture and healthcare, today it has extended its scope to direct-to-consumer (D2C) brands and sectors like fintech and gaming.“We’ve deliberately kept ASVF sector agnostic and followed a theme,” says Muzumdar, in this exclusive tete-a-tete. “Our goal is to invest in the long-term success of Indian SMBs, achieve the government’s vision of ‘Make in India’, and promote entrepreneurship over the next few decades.”
Could you tell us what the last 2.5 years have been like? What’s the one thing you would want startups and small businesses to know about ASVF?
It’s been an exciting journey! Since launch, we’ve funded 10 companies and committed to invest nearly $130 million so far. The fund is well on target to achieve its objective of empowering entrepreneurs and digitizing SMBs, and we intend to double down on existing and new investments over the coming months. We are aggressively investing in companies we believe can become significant players in the Indian government’s vision of ‘Make in India’.
What would you count as some of your big successes?
In January 2020, Jeff Bezos called out the next decade as India’s decade. Our goal is to enable SMBs and startups to become part of this growth journey. We set up ASVF to complement our long-term commitment to India and its entrepreneurial eco-system. Our success lies in the diversified portfolio we’ve built—companies led by some visionary founders—like The Good Glamm Group, FreshToHome, XYXX, Hopscotch, Fitterfly, Axio (formerly Capital Float), Cashify, Acko Insurance, smallcase, and M1xchange. These companies are leveraging technology as a key growth driver and are creating impact across sectors and consumers.
What’s the sweet spot of ASVF? What kind of companies and cheque sizes interest you?
Our sweet spot is pre-Series A onwards – i.e., seed stage companies looking to accelerate their growth and scale to the next level. We believe we can add the most value early in their growth trajectory.
The cheque size depends on the growth stage of the company, the shape of its financing rounds, and the founders’ expectations of us.
What may be of interest to startups is that we’re very flexible in terms of leading and/or following a round. We have many instances where we have demonstrated the ability to lead and follow rounds nimbly.
What would you say sets ASVF apart from other venture funds?
When we first set up the fund, our top thought was: how do we differentiate ourselves from other institutional investors and venture capital firms? We realized that the only way to help SMBs and startups was to provide tangible business help. There are many informal ways in which venture investors can help: like corporate governance, founder coaching, hiring, compliance, etc. But we were cognizant of the fact that most startups have multiple VCs on their cap table and providing similar value was inefficient. Instead, we see ourselves as much a business networking and opportunities provider as a capital provider. Amazon has visibility across many businesses like online shopping, media, cloud computing, logistics and transportation, packaging, AI, devices, etc. We offer our investee companies the opportunity to identify synergistic areas across the assets we’ve built where they can create and generate real value; Axio and QwikCilver are great examples of this. Apart from providing our investee companies with tangible business and support to scale fast and profitably, we truly believe in enabling SMBs and startups to build their entrepreneurial ventures.
2023 has been a challenging time for small businesses, with funding harder to come by than previous years. What can ASVF bring to the table for startups?
At a fundamental level, we are bullish about the long-term prospects of Indian SMBs and startups, so we feel somewhat protected from economic cycles. Unlike other venture capital firms, we have a far longer investment horizon. Nonetheless, we recognize that our co-investors need to find an exit within a set number of years, so we follow their lead to define the exit horizon. Left to us, we’d prefer to stay invested as long as possible.
Our experience shows that if a company is built on sound business principles and remains diligently customer-focused, exit opportunities will follow.
For example, Amazon made a minority investment in the fintech startup QwikCilver Solutions. Soon after, we offered them the opportunity to power Amazon Pay’s gift cards, providing a tangible revenue opportunity to the company. QwikCilver was also at a stage where they had to deliver an exit opportunity to some of its VC shareholders, so we aided and participated in its sale to Pine Labs for an all-cash deal where investors made healthy returns. Similarly, after we invested in Axio, they powered our Amazon Pay Later service. This allowed Axio to find tangible customer lending opportunities through us. These companies are testament to the value we can bring to startups at various stages of their journey.
What’s your take on D2C brands? What’s the best way for consumer brands to engage with ASVF?
If you look at the Indian market vis-a-vis the size of our population, India has always been an underserved market for brands. The country is only just beginning to see an emergence of consumer brands across categories. Some of the newer D2C brands are sharply focused on customer needs and insights. As India’s Gross Domestic Product (GDP) grows, so will our per capita income and customers will want good quality products from trusted brands across price points. Indian brands that resonate with consumers across sectors and categories are a big focus for us. Some examples of this are The Good Glamm Group, FreshToHome, Hopscotch, and XYXX, which bring together a unique combination of offerings across digital content, omni-channel customer experiences, and a broad range of innovative products to meet differentiated and emerging customer needs. At ASVF, we have a large investing team of 16 people who are dedicated to India and are always excited to meet entrepreneurs. You can connect with via the email address below.
Learn more about Amazon Smbhav Venture Fund at asvf.in. Interested in pitching to us? Drop us a line at contact-asvf@amazon.com.
