SphitiCap Launches $500 Mn Fund To Invest In Seed-Stage Indian Startups

Noida-based VC firm SphitiCap on Tuesday (October 4) announced the launch of its maiden venture fund for early-stage startups. The fund has a corpus of $500 Mn and is expected to mark its first closure at $125-$150 Mn in the ongoing quarter. 

The fund will raise the entire $500 Mn in the next 24-36 months, and will also have a greenshoe option.

The sector-agnostic fund will invest between $0.5 Mn to $15 Mn in seed and Series A Indian startups working in sectors like cleantech, fintech, deeptech, agritech, proptech, SaaS, defense, logistics and supply chain for a period of eight years. 

SphitiCap said it would invest in nearly 15-20 startups this quarter and is currently in the due diligence stage for 5 startups.

In a statement, the firm said that the fund aims to help Indian startups by infusing capital and building investors’ confidence in them.

“The investing landscape in India is exceptionally diverse. With new businesses sprouting daily, we are determined to decentralise the startup revolution and give impetus to founders who are resolved to make a difference and solve real-world problems. As a sector agnostic India-centred firm, we focus on value rather than valuation,” said Pallav Kumar Singh, managing partner of Sphiticap.

Founded in 2022 by venture capitalists Singh and Mayank Mehra, SphitiCap primarily invests in three areas – impact, growth and sustainability. 

SphitiCap said that the fund would provide support to portfolio companies by optimising their return on investment (ROI) and building an engaging ecosystem for them.

 “With innovative ideas being birthed across the country, especially with tech at the centre, there is a growing need for funds that can enable entrepreneurs from beyond the metros.There are a lot of promising startups that we are vetting and excited about working with,” said Mehra, managing partner at Sphiticap.

The announcement comes at a time when the funding winter, caused due to a global economic slowdown and fears of an impending recession, has wreaked havoc in the Indian startup ecosystem. 

The funding raised by Indian startups fell 58% year-on-year (YoY) to $810 Mn in the month of September. Meanwhile, funding raised by startups in the third quarter of 2022 plummeted 82% YoY to $1.3 Bn, as per an Inc42 analysis. 

The funding crunch has resulted in startups taking cost-cutting measures, including laying off employees, to increase their runway. As per Inc42’s layoff tracker, Indian startups have laid off over 12,500 employees in 2022 so far.

Despite this, a slew of funds have been launched by VC firms in the past few months. Elev8 Venture Partners, Weave Capital, and All In Capital are among the VC firms to have launched India-focused funds recently.