Micromax is setting up an independent fund which will raise up to USD100 million (Rs 680 crore), aimed at investing in consumer Internet companies across the world that have relevance to the Indian market.
The fund, in which the leading home-bred handset maker will be the anchor investor, will look to invest in 10-12 startups with a ticket size of USD3-5 million each.
Micromax, till recently among the second largest handset makers in India, will also cash out from two of its 10 investment portfolio companies by March, to round off what has been a tough fiscal year through March 31 underlined by intense competition.
Rahul Sharma, Co-founder, said, "Our investments into the 10 companies that were made from the first fund have been very successful, the IRR (rate of return) has been in triple digits, which is why we want to expand the horizon."
Micromax, which has expanded into the consumer durables segment, through TVs and air-conditioners, had started its investment programme in 2014, and has used a part of the USD400 million that it had set aside to invest in 10 companies so far.
The major ones include ixigo, Gaana, MiMedia, Scandid, Zapr and HealthifyMe. Gaana.com, a music app, is part of the Bennett, Coleman & Co, the publishers of this newspaper.
"We have always aimed at creating an ecosystem, which is what we did with our first investment fund," Sharma added. The new fund, Orbis Capital, will raise money from private equity firms and pension funds among other investors, both in India and overseas.
Sharma added that some potential targets have already been identified and deals could be struck in the next 18 months. "The first investment could well be in the next six months, but it depends on the fund raising," he said.
Micromax will continue to focus on innovative startups, whose products or services may be integrated back into hardware or the platform to build value for consumers.
The company has also been trying to beef up its research and development facilities and integrate services into its devices, in order to differentiate itself in a severely crowded market, which is led by Samsung.
The new fund will have an advisory board and Micromax has already started sounding off key people.
"We are looking for entrepreneurs who have built successful businesses in emerging markets, so Nami Zarrighalam, CEO and co-founder of Truecaller and fintech specialist and founder Perry Blacher will be some of the advisors to the fund, besides Micromax," said Kumar Shah, head of merger and acquisitions at the phone company. The advisors will work pro-bono.