Mumbai: Lightbox, the consumer-focused venture capital (VC) firm, plans to shift to later-stage investments in companies with greater revenue scale. The move is meant to cut the need for aggressive follow-on funding and to establish a repeatable route to profitability before it raises its next fund.
The Mumbai-based firm, which has invested about $400 million in consumer businesses, has historically focused on early-stage companies. Moving later in the investment cycle could mean entering companies at higher valuations, but Lightbox expects to reduce the need for aggressive follow-on investments by backing businesses with greater revenue scale and a clearer path to profitability, founder and managing director Sandeep Murthy told Mint.
The strategy comes as Lightbox seeks to demonstrate that it can improve the financial performance of its portfolio companies in a repeatable way before approaching investors for its fourth fund. “The right answer is to come in when they’ve moved a little bit further than where we were before. A late Series A, early Series B where companies are getting significant revenue scale,” Murthy said.
The firm has made its first exit from its third fund through women’s personal care brand Nua, generating a 6.7x multiple and a 30% internal rate of return, Murthy said. Lightbox aims to build on that exit while improving the financial performance of the rest of its portfolio.
Nua raised $50 million in a Series C funding round in September, led by Peak XV Partners and Filter Capital, which also provided an opportunity for existing investors, including Lightbox, to make partial exits. Lightbox continues to hold about 20% of the company, Murthy said.
Founded in 2014, Lightbox raised about $40 million for its first fund and $100 million for its second, before raising its third fund of about $200 million in 2019.
Profitability focus
Lightbox is focusing on the financial performance of the nine companies Murthy works closely with: Rebel Foods, Furlenco, Zeno Health, Nua, Cityflo, Bombay Shirt Company, Rupeek, Amaha and Rooter. Four of these businesses are fully profitable, while another four are expected to become profitable by the end of the year. The remaining company could take another 12 months, Murthy said.
The firm has, in some cases, chosen not to provide additional capital to companies even when they had opportunities to raise funds elsewhere, preferring to focus on their underlying business performance.
“Funding and amount of funding is not an indicator of product market fit,” Murthy said.
The approach reflects Lightbox’s emphasis on building businesses that can sustain themselves financially, rather than relying on successive funding rounds to support growth. Murthy wants to establish that the firm can help companies improve profitability in a way that can be repeated across its portfolio before approaching investors for a fourth fund.
Indian startups raised $18.3 billion across 1,660 equity funding rounds till October 2026, compared with $17.2 billion across about 2,720 rounds in the same period last year, according to Tracxn. After the high-valuation funding cycle of 2020-21 left several startups struggling to raise follow-on capital, investors have increasingly pushed portfolio companies to improve unit economics, achieve profitability and grow into their valuations. Late-stage investors, in particular, have turned cautious about overvalued businesses.
Rethinking the VC funding cycle
Murthy is critical of companies that depend on successive funding rounds rather than building businesses that can generate profits. For Lightbox, the challenge is to support growth while ensuring that companies develop sustainable business models and become less dependent on external capital.
The firm continues to see opportunities in consumer businesses, but Murthy said it does not intend to expand into areas such as deep technology, space technology or defence, where the customer base and sales process differ from those of consumer-facing companies.
“I don’t want to play in selling to the government. It’s a different skill set. It’s a different animal altogether,” he said.
Challenges
Lightbox’s portfolio has also included businesses that have faced significant challenges, including Dunzo, PayMate and Melorra.
PayMate has had a difficult journey, Murthy said, adding that the company remained resilient and its founders were working on a resolution. Lightbox continues to support the company where it can but has no capital left from the fund it invested through and is no longer in a position to provide additional funding, he said.
PayMate has faced financial difficulties, including salary delays and employee dues, while its plans have also been affected by the withdrawal of its Middle East operations and a pending deal involving DigiAsia.
Melorra, meanwhile, has been the subject of a distress-related transaction. In January, Senco Gold announced that it would acquire a 68% stake in August Jewellery Pvt. Ltd, the parent company of Melorra, for ₹68 crore. Mint had first reported on the in October 2024.