Ventureast achieves first close of $83-m tech fund

Early-stage venture capital firm Ventureast has achieved the first close of $83 million of its sixth fund, Ventureast Proactive Fund II. It is targeting a final close of $150 million and hopes to close the fund in six months. It has also announced that it is investing in three ventures out of the new fund.

The fund should have closed in November 2015, but Ventureast delayed the fund raise because of the regulatory changes that were the on the anvil. In the end, the delay turned out to be beneficial as limited partners (LPs), or investors in a fund, could now put money directly in India, instead of routing it through Mauritius, as was being done.

According to Sarath Naru, Managing Partner, Ventureast, the regulatory changes made it simpler for LPs to invest in funds.

Tech differentiator Ventureast will invest in over 30 ventures from the new fund, which it hopes to complete investing in three years. It will do both seed- and early-stage investments. According to Naru, the fund will invest in ventures where technology is a strong differentiator rather than it being a mere enabler.

The VC firm had a previous fund of $108 million from which it made early-stage investments in 18 ventures and a $14-million seed-stage fund. “With the new fund, we are combining both seed- and early-stage investing,” Naru told BusinessLine .

In the seed-stage rounds, Ventureast will put in $250,000-500,000, when the round size itself will be about $1-2 million, and in the case of early-stage investments, they will be $2-5 million rounds. Ventureast will be able to do more investments with this fund because it plans to do a lot of co-investing, roping in other seed-, early-stage and angel investors.

Unaddressed sectors According to a Ventureast press release, the new fund received strong interest from existing and new investors. The emphasis will be on relatively unaddressed sectors such as rural and semi-urban markets, needs of SMEs, and pure-play technology ventures. The VC firm expects these opportunities to emerge in fintech, enterprise applications, cloud, mobile internet, Internet of Things and consumer internet.

The release said Ventureast had partnered with leading VCs to build a pipeline even while the fund-raising activity was on in full swing. It is co-investing in three deals — Find Me A Shoe, a footwear recommendation app; OS Labs, a platform that allows handset makers and app developers to deliver a good smartphone experience; and a digital health company.

On the investment climate in the country, Naru said there continued to be good demand, especially from entrepreneurs who had realised that capital cannot be a differentiator for the business.

Also, entrepreneurs had realised that technology cannot be a mere enabler and that it had to be a differentiator for the venture to succeed. There were good opportunities coming up in the B2B space.

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