SUMMARY
The fund will make initial investments in the range of INR 50 Lakh to INR 1 Cr per startup, with a follow on round of up to INR 2 Cr
The funding will be in the nature of equity, preference capital, debentures or a combination of these
The Karnataka government has set its eyes on generating 30,000 new jobs in the AVGC-XR sector over the next five years
The Karnataka government has launched an INR 20 Cr venture capital (VC) fund that will invest in the animation, visual effects, gaming and comics (AVGC) startups.
Called the KITVEN (Karnataka Information Technology Venture Capital Fund) Fund-4 (AVGC), it will make investments in the range of INR 50 Lakh to INR 1 Cr per startup. The fund, limited just to companies operating in the state, also has provisions for follow-on investments with further capital infusion up to INR 2 Cr.
In a statement, the government said that the funding will be offered in lieu of equity, preference capital (convertible/ redeemable), debentures, or a combination of all these. While the fund will hold the startups in its portfolio for a period of three to five years, it will also be open to investments over lower periods.
The funding announcement was made by KITVEN’s CEO PV Harikrishnan during the fifth edition of Bengaluru GAFX, 2024.
Speaking at the event, chief minister Siddaramaiah reportedly said that the state government wants Karnataka to emerge as a global AVGC-XR hub. As per news agency PTI, the government has set its eyes on generating 30,000 new jobs in the sector over the next five years.
“The launch of the KITVEN Fund-4 AVGC represents a significant step towards fostering innovation and development in this field. This initiative not only highlights the government’s commitment but also paves the way for potential growth and advancement in the sector,” said principal VC at Lumikai, Kislay Shashwat.
Launched in 1999, KITVEN receives subscriptions from key bodies of the Karnataka government. It last raised KITVEN Fund-5, with a target corpus of INR 100 Cr, that invests in AI, medtech, cleantech and other emerging sectors.
The move is part of the state government’s renewed push for the emerging sector. In November 2023, the government launched a dedicated AVGC-XR policy 3.0 to spur the sector. The policy also envisages an early-stage startup support program to offer partial cost coverage for aspects such as manpower, marketing, and infrastructure to push local players.
Curiously, its neighbouring state Kerala also recently proposed to formulate a comprehensive policy for AVGC-XR with an aim to create 50,000 jobs by 2029.
Karnataka is called India’s startup hub and has consistently topped the Centre’s ranking on ease of doing business and the ‘States’ Startup Ranking 2022’. According to Inc42 data, Bengaluru-based startups raised $4.2 Bn in 2023, down 61% year-on-year (YoY).
