Fundamental VC Sets Up $130 Mn Fund For Early-Stage Startups

Bengaluru-based venture capital firm Fundamental VC has launched its first fund with a target corpus of $130 Mn to invest in early-stage startups.

The fund is sector-agnostic and will invest in startups across verticals including consumer internet, SaaS, insurtech, healthtech, fintech, gaming and AI, among others.

The fund will target an average ticket size of $1.5 Mn. This means that Fundamental VC will be aiming to support 30 startups over the next two years.

According to a company statement, the debut fund received approval from India’s Securities and Exchange Board (SEBI) in March. It has already started deploying capital to lead pre-seed and seed rounds in startups.

According to the company’s press statement, Fundamental VC’s maiden fund is backed by domestic and international Limited Partners (LPs) from regions such as West Asia, Singapore and the US.

The mix of LPs comprises a number of unicorn founders, high net worth individuals (HNIs), family offices and senior tech executives, according to the company statement.

Founded by angel investors Saswat Sundar and Abhishek Rathi, who have worked together on the startup fundraising platform LetsVenture, the fund is the duo’s second VC venture together.

Sundar, who is a partner and cofounder at Fundamental VC, said, “Our focus on early-stage startups is due to our ability to understand the pulse of the ecosystem and build companies from the ground up and scale them globally. Whether it is networking to strengthen the proposition, building a high-quality team or finding solutions to daily teething issues, we understand the hassles of starting up and intend to work collaboratively with founders.”

Sundar added that the VC firm will be investing in a small number of startups with sound fundamentals. Fundamental VC has also prepared a ‘ready-to-scale’ stack to help its portfolio startup achieve product-market fit quicker.

Rathi said that the two of them realised the strong need for approachable institutional capital support for early-stage founders.

“Fundraising has always been a full-time activity for entrepreneurs. Hence, as partners with a skin-in-the-game approach, we want to ensure that founders stay focused towards building what they enjoy the most, while we take on the responsibility of enabling capital support required to build their venture,” Rathi added.

According to the company website, Fundamental VC already has the likes of StockGro, Kenko, Redcliffe Labs, TradeX, Blu Smart Mobility, Dukaan, Agnikul and six other startups in its portfolio.

Fundamental VC’s fund comes at a time when top industry executives have stated that early-stage startup funding will be hard to come by. Sanjeev Bikhchandani, investor and executive vice-chairperson of Info Edge, had gone on record stating that owing to muted valuations amid the global economic slowdown, early-stage funding will slow down.

In an interaction with CNBC-TV18, Bikhchandani said, “Even early-stage fundraising is getting difficult as valuations have become muted. The way startups are being advised to spend their money or conserve cash by investors has also changed.”

Over the last couple of weeks, the Indian startup ecosystem has seen a handful of funds announced across a range of verticals and startup stages. The biggest fund announced recently was Matrix Partners India’s $450 Mn fund.

However, over the last few days, both Multiply Ventures and Piper Serica have set up funds to help early-stage startups in India with capital requirements. The two funds, set at a collective corpus of INR 360 Cr ($46 Mn) will invest in 40-50 early-stage startups.

At the same time, Sequoia India’s Surge, which invests in Pre-seed and seed stages, announced just yesterday (June 23) that it will be increasing its ticket size to $3 Mn to cater to a larger range of startups.