StartupXseed Ventures LLP, which manages seed-stage venture fund Aaruha Technology Fund, has raised half the target corpus of its Rs 100-crore fund following a commitment from Canbank Venture Capital Fund Ltd.
Canbank Venture, a wholly-owned subsidiary of public sector lender Canara Bank, has committed 20%, or Rs 20 crore, towards the fund, said BV Naidu, the founder of StartupXseed, which expects to hit the final close in June 2018.
The fund was launched in 2015. Naidu, V Balakrishnan, Ramakrishnan V and Aarin Capital contributed to its initial corpus of Rs 30 crore.
Aarin Capital is a venture capital firm led by former Infosys board member TV Mohandas Pai and Manipal Group scion Ranjan Pai. Mohandas Pai and Ranjan Pai are not related.
Balakrishnan chairs the board of StartupXseed. He is also the chairman of Exfinity Venture Partners and a former Infosys director.
StartupXseed has so far made five investments from its maiden fund. It has backed IT security firm ShieldSquare, IIT Kanpur-incubated unmanned aerial vehicle maker Aarav Unmanned Systems, agri-tech startup AIBono (formerly Airwood Aerostructures), enterprise human resources management platform DarwinBox and fab-less semiconductor company Siliconch Systems.
The fund is considering three more deals in the medical devices and the fintech space, said Naidu, a former bureaucrat and director of the central government-run Software Technology Parks of India.
StartupXseed focuses in B2B business opportunities. With Canbank as a limited partner, the company seeks to accelerate its investment plans in the areas of deep technology startups such as nano electronics, artificial intelligence and markup language, cyber security, semiconductor and Internet of Things.
It is also planning to invest in new and emerging technologies such as blockchain, cloud technologies and AI for different business applications, besides looking at synergising its existing and new investments.
Naidu said that the company will make follow-on investments in a limited way. “We will not get into Series A level follow on investments. As an objective, we want to focus on seed level. It is a specialised segment where we work like co-founders with our portfolio firms and bring them to up-round.”
According to Naidu, the pace of investments was slow compared to the initial plans because it was difficult to get quality entrepreneurs.
A bunch of venture capital funds, including IDG Ventures, Endiya Partners, Stellaris Venture Partners and Fireside Ventures, have either made the first or final close of their funds this year.
While venture capital firms have continued to raise funds, angel and venture investments have slowed down considerably over the past two years.