Nandan Nilekani’s VC firm Fundamentum Partnership has raised $227 million for its second fund to invest in India’s consumer internet and enterprise software space.

“The fund was launched about three months back with a target of $150- $160 million but was oversubscribed because of the LP interest. About 25 per cent of this fund has come from the Fundamentum Team and the rest 75 per cent was from entrepreneurs,” said Fundamentum’s Co-Founder and General Partner Sanjeev Aggarwal. 

Currently, there is no institutional investor among the limited partners of Fundamentum’s second fund. However, the fund might add a few more LPs whom it is speaking with. The hard limit for the second fund is set at $250 million. 

With this fund,  Fundamentum’s average investment ticket size will be around $10- $15 million. It also plans to lead or co-lead $25-40 million rounds, investing in 4-5 start-ups each year. Fundamentum plans to fund enterprises that have attained product-market fit and have developed momentum in their scale-up journey. The fund primarily focuses on Series B/C stage rounds. The new fund will also focus on emerging sectors such as Bharat Apps, SaaS and Clean-tech, among others. 

Launched in 2017, Fundamentum has fully deployed its first $100 million fund in six early growth stage start-ups including the likes of Pharmeasy, Spinny, and Travel Triangle. Post the fund’s initial investment, Fundamentum’s portfolio companies have collectively raised over $1 billion in follow-on rounds.

Global startup ecosystem

Further, commenting on the funding winter in the global startup ecosystem, Co-founder and General Partner, Nandan Nilekani said, “We are extremely optimistic and positive about India’s digital transformation led by the great companies that are coming up. We continue to see great companies out there and believe that we have to stay the course. There are great companies that we can invest in and help grow,  that’s all it is about. When you look at what happened even in the West, some of the big companies came out of difficult times. Facebook was born just before the financial crisis. So, these macro things happen but we are long term bullish on Indian startups.”

He added that India has 90,000 startups today and around 100 unicorns. “We are seeing startup alumni become entrepreneurs, we are seeing liquidity events and people are getting exits. So there’s a maturing of the industry. While there could be situations in the world, we are very confident that we are raising money at the right time. In fact, this time we will get access to very good companies. So we are very positive and bullish about what we’re doing,” said Nilekani. 

One of the portfolio companies of Fundamentum Partnership, Pharmeasy, is reportedly raising a new funding round at 15-25 per cent lower valuation, because of the tough funding environment. Responding to this, Ashish Kumar, Co-Founder and General Partner told BusinessLine that Pharmeasy is well funded at this point of time and Fundamentum is not aware of any such activity.

“As an ecosystem, up rounds and down rounds will continue to happen. At this point of time, the multiples have dropped and this honestly is not a reflection of companies doing well or not doing well. It is just a reflection of the multiples changing. I don’t think there should be any taboo around down rounds,” Kumar added.  He also noted that flat rounds will be more common in the ecosystem as compared to down rounds.

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