Mumbai-based venture capital firm Equanimity Investments has made the first close of its debut fund at Rs 70 crore ($10.8 million), founder Rajesh Sehgal said on Monday.
The milestone comes exactly a year after Sehgal floated the early-stage fund after leaving Franklin Templeton Investments.
The fund has a target corpus of Rs 200 crore, including a greenshoe option of Rs 100 crore. The fund is sector-agnostic but plans to back early-stage tech startups in sectors such as fin-tech, health-tech and data analytics.
Separately, a company statement said emerging markets investment guru Mark Mobius has joined the VC firm’s investment committee. Mobius is one of the limited partners of the VC firm.
The fund plans to invest in 20 companies, making seven to eight bets a year, and will pick up a 10-30% stake in the startups it backs. The average investment size will be between $500,000 and $3 million. It has a 10% hurdle rate.
“The risk-return ratio is highly in favour of early-stage startups. We expect annualised returns of 40-50%,” Sehgal said. He added that the fund aims to achieve its final close this calendar year.
With regard to exits, Sehgal said the fund will either pursue strategic sales or will sell to financial investors. “For exits, the best-case scenario is initial public offerings,” he added.
Equanimity determines its startup investments by looking at the quality of the founding team and the size and scale of the business. “We don’t want to put money in businesses that have high cash burn,” Sehgal said.
Separately, the VC firm has tied up with Sanctum Wealth Management to help clients diversify their portfolios by investing in early-stage startups.
Though the fund will primarily focus on ventures in India, it will look at investments abroad, the VC firm had said last year.
At Franklin Templeton, Sehgal worked with the emerging markets group, managing pre-IPO, private investments in public enterprises and private equity deals with focus on India.
He is also an angel investor, having backed 22 startups since 2007. He has exited eight of them, including online certificate course provider EduPristine, refurbished goods e-tailer GreenDust, wearables firm Dhama Innovations, mobile marketing startup Zipdial, English language training firm Speak Well Skills Academy, automation solutions firm Textual Analytics, after-service bike startup Express Bike Works and deals platform Squeakee.