Jitendra Nagpal, previously the Chief Financial Officer (CFO) of Zepto, a quick-commerce startup, has shifted his focus to supporting the financial needs of early-stage startups. Nagpal is leading the way with Capinity Partners, a pioneering venture capital firm aiming to achieve its first round of funding by the end of this year, as he reveals to Kukla Times.
Capinity Partners will primarily invest in digital-first firms operating up to the pre-Series A funding round, with a particular emphasis on startups in their early stages.
Nagpal has teamed up with two seasoned professionals in finance and banking: Tarun Bhargava and Vikas Somani. Bhargava, the Founder and Managing Partner at TalentGen Advisory LLP, is an influential angel investor in multiple startups, including UrbanPiper, Pixxel, Mokobara, and Garuda Aerospace.
Somani, currently the CFO at Ovik Finance, brings extensive experience in the banking sector, having overseen MSME loans at ICICI Bank and IndusInd Bank, among others.
Bhargava and Somani will join Nagpal as partners at Capinity Partners, headquartered in Mumbai. The firm currently has nearly 10 associates working closely with the partners.
During his tenure, Nagpal successfully managed the financial operations of Zepto, a Y Combinator-backed company, for nearly three years. Prior to that, he held senior positions in the finance divisions of Country Delight, a dairy startup, and PharmEasy, an e-pharmacy firm.
Recognizing the need to address the mismatch between founders and investors in terms of vision and mentorship, Nagpal explains, “I knew early on that I wanted to build something to fuel capital needs for startups.”
With a vision to be a “catalyst for entrepreneurial success,” Capinity Partners aims to secure the first round of funding, amounting to $30 million, by December 2023. Nagpal highlights that the fund will remain sector-agnostic, and the investment thesis will revolve around three key criteria.
Firstly, the startup must target a “large enough” total addressable market. Secondly, it should be capable of achieving positive unit economics rapidly, without excessive cash burn. Lastly, it should offer a favourable return on capital employed and free cash flow.
Established in May of this year, Capinity Partners holds an optimistic outlook on various sectors, including e-commerce, clean tech, consumer technology, and fintech.
Nagpal emphasizes, “Capinity will not invest in any startup building products or services exclusively for the elite population, as it is very challenging to grow a business in most cases.” Instead, the firm will focus on digital-first startups catering to online shoppers with a reasonable disposable income.
Capinity has already invested in four startups at the pre-seed and seed stages, although specific names were not disclosed by the Co-founder and Partner.
Meanwhile, Nagpal, Somani, and Bhargava devote their time to mentoring startup founders in product development, refining go-to-market strategies, shaping revenue models, and delivering cohesive investor pitches.
They have already guided approximately 10 Indian startups through what they internally refer to as the “incubator program.” This initiative was launched last year to gain insights into founders’ pain points and the startup ecosystem.
Tough market:
According to research conducted by Kukla Times, leading venture capital (VC) funds have raised approximately $10 billion from 2022 until now. However, the slow deployment of funds and prolonged deal closure timelines may adversely affect founders.
Despite this challenging market environment, Capinity believes it is an opportune time for early-stage startups to thrive. Bhargava, the Co
-founder and Partner, affirms, “Even for investors, it is a favourable environment to advise and invest in fundamentally strong product organizations.” He further expresses that once the funding inflow improves, firms can scale and experience significant growth with global support.
To capitalize on this opportunity, Capinity has attracted limited partners (LP) from various regions worldwide, including the Middle East and Europe. Nagpal adds, “Investors in these regions continue to be optimistic about India and have high hopes for its growth potential.”
With their extensive investment experience across different stages, the partners aim to provide founders with an additional runway and lower dilution, considering the current macroeconomic climate where valuation multiples remain subdued. Furthermore, they highlight the global potential of sectors such as e-mobility, deeptech, and generative artificial intelligence (AI).
Climate-focused fund:
In addition to its core investment fund, Capinity is also in the process of establishing a climate-focused fund that will support clean tech and climate startups. The new fund, expected to be announced within the next 15 months, will have a corpus ranging from $100 million to $200 million. Nagpal envisions this fund as a catalyst to drive the emergence of cleantech startups in India.
In conclusion, Jitendra Nagpal’s Capinity Partners aims to bridge the gap between founders and investors by providing early-stage startups with the necessary financial support, mentorship, and guidance. With a sector-agnostic investment approach and a focus on digital-first startups, Capinity Partners strives to foster entrepreneurial success while actively contributing to the growth of the Indian startup ecosystem.