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Stakeboat Capital Launches FUND-II To Tap Into Opportunities In The SME Sector

Stakeboat Capital is an independent growth equity firm focused on investing in small and medium enterprises (SMEs) in India in the form of control or buyout transactions. It says it is looking at targeting foreign investors, institutional investors and family offices to raise Rs 1000 crore

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Bengaluru-based independent growth equity firm, Stakeboat Capital, has launched its second fund (Fund-II) of INR 1000 crores. Fund-II will remain focused on investing in growth equity in small and medium enterprises (SMEs) in the form of control and buyout transactions. The fund will seek to invest in existing companies with revenue between INR50 crores and INR 250 crores in the form of both primary and secondary transactions. 

Chandrasekar Kandasamy, Founder and Managing Partner, Stakeboat Capital, said, ”As a part of our vision to back the Indian small and medium enterprises, we are delighted to launch Fund-II which further reaffirms our commitment to recognize and support SME entrepreneurs. We will be focused on our investment strategy, identifying SMEs with revenues ranging between Rs 50 – Rs 250 crores wherein, we would like to hold 51-70 percent equity shareholding in the target companies. Our strategy has worked out very well in Fund-I and is reflected in the performance. We have supported SME entrepreneurs in multiple ways, be it in monetizing their business or bringing in global connects and relationships through our partnership network.”

Fund-II will be focused on three major sectors – Healthcare and Lifesciences; B2B Technologies / Businesses and Services; Value Added Industrials / Manufacturing. Stakeboat will look to exit in about 3-5 years from the portfolio companies in the form of either a strategic sale or a secondary sale to a larger investor. Stakeboat is looking to expand access for Fund-II to a broader set of investors from both domestic and international markets. The company is expecting to raise a large part of Fund II from institutional investors and family offices. Stakeboat received SEBI approval for Fund-II in early  November 2020.

Kandasamy added, “The first close of Fund-II is expected to happen between June to September 2021; we are targeting the final close in 2022. We have had a successful run with Fund-I so far. More than 70% of Fund I has been fully deployed. We expect to invest in two more companies by March 2021, post which the Fund will be fully deployed. All our portfolio companies where Fund-I is deployed have demonstrated resilience in terms of getting back to normalcy and would end up achieving a 20-100% growth for FY March 2021 compared to pre-COVID financials.”

Stakeboat’s portfolio of investments includes Leixir Resources (dental labs), Sankalp Semiconductor (Analog and Mixed-Signal Semiconductor services), Dvara Financial Services (NBFC targeted at Tier 4 / Tier 5 towns and villages) and LeadSquared (SaaS). More recently, Stakeboat participated in the Series-B funding of LeadSquared, increasing its existing shareholding in the company. Stakeboat’s Fund-I is backed by domestic investors comprising HNIs, family offices and Indian institutional investors like SIDBI, NABARD and BIRAC.