The Investment Trust of India (ITI), a financial services group backed by Sun Pharmaceutical Industries Ltd director Sudhir Valia, has marked the first close of its Rs 150 crore ($20 million) early-stage venture capital fund, a top executive told VCCircle.
The ITI Growth Opportunities Venture Fund hit the first close at Rs 30 crore with the entire amount coming as sponsor commitment from ITI Group, said Mohit Gulati, managing general partner at the fund.
The fund aims to raise Rs 100 crore and has a greenshoe option to raise another Rs 50 crore. It is targeting both domestic and overseas Limited Partners (LPs) to raise the capital. However, the ITI Group has made a soft commitment for the entire Rs 100 crore in case it doesn’t get enough external investors, said Gulati. It aims to make the final close in the next 12 months’ time.
The fund is likely to typically invest $500,000 in a startup at the seed and pre-Series A stages of funding. It also plans to co-invest at a company's Series A stage selectively.
The fund will look to invest across sectors including health-tech, fintech, retail, artificial intelligence and machine learning. “With my experience earlier in logistics, I see huge potential in this sector,” said Gulati, who was earlier an investor in logistics company Ecom Express.
The fund has formed an advisory team of people with domain expertise in these sectors. It has looked at six startups and could shortly announce making investments in these companies.
Gulati said that, unlike most PE and VC funds, the ITI fund will not charge an upfront management fee. “Typically, if I raise Rs 100, Rs 8 goes to pay the management fee. We want to deploy all the money we get for our fund into companies directly.”
The Mint newspaper first reported news of the fund, citing Gulati, earlier in the day.
Incorporated in 1991, ITI group offers a range of products and services such as lending, equities and derivatives trading, equity research, commodities trading, portfolio management services, distribution of mutual funds, IPO and insurance products and investment banking services. The group has a presence in over 75 locations with about 1,200 employees.
ITI’s fund comes at a time when a slew of corporate professionals and family business houses have floated investment vehicles in the past years to back startups.
Last month, former Tata Sons Ltd chairman Cyrus Mistry floated investment firm Mistry Ventures LLP to incubate new ventures and provide seed- and early-stage growth capital to startups in India and other countries.
Mistry’s announcement on funding startups came exactly two years after he was unceremoniously ousted as the chairman of Tata Sons in October 2016 at the behest of former chairman Ratan Tata.
Ratan Tata himself had begun actively investing in startups after he quit as the chairman of Tata Sons in 2012. Tata’s RNT Associates has invested in several high-profile startups such as digital payments firm Paytm, eyewear e-tailer Lenskart, furniture e-tailer Urban Ladder, cab aggregator Ola and Chinese mobile handset manufacturer Xiaomi.
Other examples of such investment vehicles include Wipro founder Azim Premji’s PremjiInvest and Infosys co-founders NR Narayana Murthy's Catamaran Ventures.