Nilekani, Aggarwal launch $100-mn fund for startups
BENGALURU: Former Unique Identification Authority of India chairman and Infosys Ltd co-founder Nandan Nilekani has teamed up with venture capitalist Sanjeev Aggarwal to launch a new $100-million fund called The Fundamentum Partnership for mid-stage consumer technology and software startups that could be the next big thing.
Nilekani said the size of the fund could be raised to $200 million if it finds lucrative bets.
In an interview, Nilekani said the new venture capital fund had already raised about $50 million of the total corpus, with the remaining half expected to be closed over the next few months. Nilekani and Aggarwal together are contributing a third of the fund, or $30-35 million.
Nilekani and Helion Ventures founder Aggarwal have already identified a team to manage the fund; they have hired Indian Institute of Technology (IIT)-Kanpur graduate and entrepreneur Ashish Kumar and IITKharagpur graduate Pratik Guha as partners.
“The management team that we are putting in place for the fund are all young people, so we are going to make sure that they make some money,” said Nilekani.
He and Aggarwal will not be charging any fund management fee or “carried interest”, despite being the founders of the new fund. Fundamentum will look to make two to three investments every year.
The new fund will help fill the gap in funding for relatively mature start-ups. While new tech ventures have found plenty of takers, funding has dried up for these ventures at later stages since the end of 2015.
Nilekani said the decision to launch the new fund was triggered by the need to create more long-term and sustainable businesses such as Infosys, Wipro Ltd, Bharti Airtel Ltd and Kotak Mahindra Bank Ltd.
“While I was at Infosys and in the government, I never did any start-up investments. In the last three years I’ve experienced working with start-ups and I’ve made investments—one thing that struck me was that while there was a lot of startup activity, what we really need is scale-up where people are focused on building companies for the long term. And that’s something that I enjoy doing—working with companies and thinking long-term, marathon running in some sense,” said Nilekani, who will route future investments through the fund.
Over the life cycle of the fund, Fundamentum will look to back about 10-15 startups. The fund will typically back start-ups at the series B and series C stages and lead rounds ranging from $10 million to $25 million.
Nilekani said Fundamentum will not back any startups in sectors such as education and payments and ventures that are using Aadhaar as core infrastructure, given his philanthropic and advisory commitments in these areas.