Seed-stage investor SRI Capital has marked the first close of its debut venture capital fund at $40 million (Rs 274 crore) to invest in early-stage technology startups in India and the US, the firm’s founder and managing partner Sashi Reddi told VCCircle.
SRI Capital, founded in 2012, has been investing through the family office of Reddi till last year both in India and the US.
The new fund, SRI Capital Fund-I, is registered in the US. It has a target corpus of $100 million (Rs 685 crore) and will make one-third of its investments in India and the remaining in the US.
SRI Capital has come in as an anchor investor with $20 million in the fund and the balance $20 million was pooled in by US entrepreneurs, said Reddi.
The final close of the fund is expected by March next year and the bulk of the capital is expected to be raised from Limited Partners (LPs) in the US. It, however, expects to get a contribution from LPs in Europe and Singapore as well.
“There is a funding gap for Indian startups targeting US enterprise customers. Indian VCs have struggled to support these US-focussed startups, whereas US VCs typically do not understand India-based tech teams. This is the gap that SRI Capital will fill,” said Reddi separately in a statement. He added that the fund may also look at investments in Indian and US companies based in Singapore.
The fund will typically invest $1-3 million in a startup at the pre-Series A level. It, however, aims to make four to five investments of $5-6 million at the Series A stage.
“We are looking at deploying 60% of the funds on new investments and 40% for follow-on transactions,” he said.
The fund will continue to focus on enterprise software and enterprise technology, areas it believes are its core strength. It also aims to tap startups going after the Indian consumer story, he added.
The fund has already made three investments in India—LetsMD, a fintech startup catering to the healthcare space; Sports Flashes, which operates a sports content app; and IndianMoney, a financial education company—that have the consumer story flavour, said Reddi. Its next three investments are expected to be in the enterprise software space, he added, without disclosing further details.
SRI Capital’s family office made over 30 bets since 2012. Some of its major investments that went on to raise larger funding include over-the-top (OTT) video platform YuppTV, which raised $50 million from KKR-backed Emerald Media; and budget hotel aggregator FabHotels, which raised $25 million in a Series B round led Goldman Sachs Investment Partners last year.
Reddi said a bulk of the family office portfolio is still young to actively consider exits.
In an interaction with VCCircle last month, Reddi had said some of the VC firm’s portfolio companies that will deliver a 10-15 times return to SRI Capital include PhenomPeople (recruitment SaaS player) and ThinCI (chip company in autonomous vehicles). “That is one reason we are now showing a 42% IRR compared to an industry average in single digits,” he had said.
Other VCs raising funds
A clutch of venture capital firms have announced fundraising milestones this year.
Earlier this week, Ganesh Ventures, which was founded by Jessica Wong, marked the first close of its fund at $30 million. eWTP Ecosystem Fund, a privately owned fund led by Yongfu Yu and backed by Alibaba’s Jack Ma, and Hong Kong-based Lion Capital are strategic investment partners of Ganesh Ventures fund.
Earlier this month, Artha Venture Fund, majorly backed by Singularity Holdings and the family office of former BSE director Ashok Kumar Damani, also said it has marked the first close of its debut fund at $6 million.
Besides these, a bunch of homegrown venture capital firms such as Fireside Ventures, Prime Venture Partners, India Quotient, pi Ventures and 3one4 Capital have also announced fundraising milestones earlier this year, which could spur funding deal volumes that have seen a decline after the boom in 2015.