Info Edge Venture Fund has raised ₹375 crore from MacRitchie Investments, a subsidiary of Temasek Holdings, according to a stock exchange filing. The venture fund was set up in January this year as an alternative investment fund (AIF), with a corpus of ₹750 crore, for investments in early stage technology companies in India.
Under the Securities and Exchange Board of India’s regulations, a category-II AIF can raise money from high net-worth individuals and foreign investors to invest in unlisted companies. Usually, venture capital funds are registered as category-I AIFs which can invest in startups or early stage ventures. A category-II registration, allows the Info Edge Venture Fund to operate as a private equity or debt financier.
The fund raise by Info Edge Venture Fund follows recent criticism by Sanjeev Bikhchandani, the company’s founder and vice chairman, on the Indian startup environment. According to Bikhchandani, the Indian economy loses out on tax revenues, market value and intellectual property of startups, when they ‘flip’ abroad or create a foreign holding company. “Basically institutionalised transfer of wealth away from India while living off the Indian market and Indian labour somewhat like the days of the Company rule,” he said, likening the environment to the days of the East India Company.
However, Pallav Narang, partner at CNK RK & Co Chartered Accountants in an interview with MediaNama said that the decision to flip abroad is driven less by tax considerations but more by access to an ecosystem of institutions that exist abroad, particularly in the United States. “The benefits of flipping are not driven by a decision to arbitrate between different tax jurisdictions but rather, there are other benefits such as of access to incubators, advisors, financiers, investors and the wider-ecosystem,” Narang said.
**Updated (December 11, 2020 at 5:00pm). An earlier version of this article stated that Info Edge had set up the venture fund on Friday, when the company had set it up earlier. The error is regretted. Originally published on December 11, 2020 at 4:18 pm.