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Venture capital Kalaari Capital, an early investor in Snapdeal and Myntra, is planning to invest about $20 Mn (INR 135 Cr.) in 40 startups over the next two years as a part of its seed and incubation programme called as KStart, reported ET.
The VC firm, which raised $290 Mn last year, is mainly focused on investing in series A funding of $3 – $4 Mn and has stayed away from the early-investment stage. “We didn’t do a single seed deal in the last 10 years, but we feel that there is a requirement and a gap in the market in terms of mentoring,” said Vani Kola, MD at Kalaari Capital.
As for peers Accel Partners and SAIF Partners, they had started seed investment programmes in 2014 and 2015.
The Reserve Bank of India (RBI) announcing its monetary policy recently, said it would ease the regulations to allow startups to raise foreign venture capital using innovative tools like convertible notes to bolster entrepreneurship in the country.
The instrument functions as a debt that will automatically convert into preferred stock on the closing of series A fundraising, avoiding stock dilution when a startup is still validating its idea. Convertibles are typically used by accelerators, angel investors or seed-stage funds like India Quotient, but are rarely employed by large, Indian VC firms.
Kalaari had earlier hired former Cisco CTO Padmasree Warrior and Airbnb’s global expansion head Varsha Rao to mentor its portfolio startups that is under its seed investment programme, KStart.
“The number of series A deals in the market among Indian VCs are only 40-50 transactions every year, so a majority of seed deals will not get follow-on rounds,” said Sharad Sharma, angel investor and cofounder of software products thinktank iSPIRT.
Kstart is a unique seed program that will empower the next generation startups and accelerate disruptive ideas to become market leading companies. The program’s focus is to enable visionary founders to build game-changing businesses by combining all key factors necessary for startup success. KStart will have a new batch every quarter of up to five startups.
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