IndianStartupFactory Gets SEBI Nod To Launch $27.8 Mn Maiden India Fund

New Delhi-based financial services company IndianStartupFactory has received the final nod from market regulator SEBI, to launch its maiden venture capital fund worth $27.8 Mn (INR 200 Cr).

IndianStartupFactory was founded in 2016 majorly as supporter to startup mentoring and finances. It has now launched its maiden India fund, ISF Special Opportunity Fund. With this, the firm is looking to invest in startups at early and growth stage, SMEs and MSMEs (Micro, Small & Medium Enterprises).

Kapil Kaul, the founder of the ISF Special Opportunity Fund, confirmed the development to Inc42.

“The most important element which provides an edge to our fund is our method of due diligence, which will be inclined towards methods used by PE firms. But we will be investing on basis of venture capital fundamental,” he said.

Further, ISF will majorly be investing in startups where the operational profitability is already clear or the startup is looking forward to operational profitability within 12-18 months of investment.

Also, it is a sector agnostic fund. “We will definitely not be interested in real estate as of now, but we might take into consideration government approved infra projects,” added Kapil.

Here are some key details about the ISF Special Opportunity Fund:

• The ticket size would be approximately $200 K to $3-4 Mn. This investment by the company can be both stage wise investment or in a one-time deal.
• Looking to deploy the entire capital in less than two years
• Will be investing in 15-20 startups
• Looking to launch an incubation centric model to offer mentoring, guidance, business expert help and more
• Have almost finalised term sheets to invest in three to five startups

Other notable startup funds launched this year were:

• Mumbai-based Artha India Ventures, an institutional fund received approval for $31.5 Mn (INR 200 Cr)  from SEBI.
• Managing Partner at venture capital firm SRI Capital Sashi Reddi had launched a $100 Mn technology focused early-stage venture fund on July 2018.
• In July 2018, two former managing directors (MDs) from Sequoia Capital  – V T Bharadwaj and Gautam Mago came together to launch $291 Mn (INR 2000 Cr) investment company named A91 partners.
• Mumbai-based early-stage VC firm Unicorn India Ventures had partnered with British counterpart Ascension Ventures to launch a cross-border evergreen fund named Unicorn Ascension EIS Fund which will support UK-based startups that are looking to enter the Indian market.

Inc42 DataLabs, in its H1 2018 funding report observed that fewer startups are being able to crack seed-stage funding deals. However, amid this dry run of funds, mature startups or the startups at growth stage have been able to take in big-ticket size fundings.

“The number of deals in H1 2018 increased by 15% compared to H2 2017. However, the funding amount fell by 40% compared to H2 2017 and by 18% compared to H1 2017,” mentions the Inc42 tech startup funding report H1 2018.

In such times, the growth of early stage investors who are looking for profit-oriented business models will certainly be a booster to the overall sentiment of the Indian startup ecosystem.