T.V.Mohandas Pai, V Balakrishnan and others launch Rs 30 crores fund
In the last decade, the technology landscape has grown to $140 billion, with large corporates spending significant amount of money in areas like cloud mobility, data analytics, security and many more. And startups here are playing a larger role to make innovations happen in the IT industry. However, India still seems to be lagging behind compared to Silicon Valley when it comes to having a holistic ecosystem because of the limited roles played by VCs, PEs and angel investors.
StartupXseed Venture LLP on Thursday has launched Aaruha Technology Fund with an initial investment of Rs 30 crores to bridge this gap. The fund aims to provide a holistic support to the startup ecosystem in India with a key focus on Bengaluru and Hyderabad.
B.V.Naidu along with T.V.Mohandas Pai, V Balakrishnan, J.A.Chowdhary and Ravi Thakur have founded StartupXseed in June 2015.
This year, the fund will invest in 15-20 seed level startups which are into security, semiconductor and embedded devices with a ticket size starting from Rs 50 lakhs to Rs 2 crores.
StartupXseed Ventures LLP is the Investment Manager of “Aaruha Technology Fund” registered with Securities and Exchange Board of India (SEBI) as Category I - under Alternative Investment Fund (AIF) Regulations 2012.
Speaking at the StartupXseed fund launch in Bengaluru, B.V Naidu, Managing Partner of StartupXseed, said,
We wanted our portfolio companies to exceed in their performance while we are seeding them. Apart from the seed fund, we will provide strategic support, mentorship, market access and other resources required to build a venture. So, the startups can choose the services they need and we can customize those offerings for them. There are almost 18-20 people available in our network of investor and advisory team.
StartupXseed's leadership team spread across Bengaluru and Hyderabad possesses diverse skill sets in operations, finance, and making deals. These professionals will assist startups in building brands, scaling up business operations, making good financial decisions, and generating revenue channels.
Naidu added, "We will help the startups during their initial18-20 months and then we will take an exit as long as follow on funds would agree on that."
First startup company
StartupXseed has revealed the name of its first startup company ShieldSquare which operates in the area of BOT prevention and Internet security. The startup has customers in 27 countries in verticals like online marketplaces, e-commerce, travel portals, and many more. It protects online businesses from web scraping, bot abuse, form spam, and click fraud.
Pavan Thatha, Co-founder and CEO of ShieldSquare, said,
StartupXseed will help us with the access to industry stalwarts, international partners, and VC connections during the initial stage which will help to maximize the RoI for future investors and enable faster time to market.
Challenges for startups
Low key infrastructure, loosely coupled mentorship, lower investment from angels and lack of exposure to international partnerships and VC partner are some of the key challenges which the seed staged startup community is facing in India.
V Balakrishnan, Chairman of StartupXseed, said,
Silicon Valley has created a great ecosystem working with institutions, universities, VC funds, where new ideas can come to the table, and execute and become big. India does not have that kind of ecosystem. Angel funds are giving money but they are not handholding the company to attain the next level.
He added, "There are educational institutions which are running incubators, where ideas are lying in labs and are not transforming into marketplace. Connecting the dots can create a good ecosystem. StartupXseed is one such idea where we are putting the seed capital, handholding the startups and participating in the business plan, sales call, and trying to make the product available for the marketplace. This way we can enable Bengaluru to become the Silicon Valley of India."
India to become a startup nation
T.V. Mohandas Pai, Partner and Co-founder of Aaron Capital, and Chairman of Manipal Global Education, shared the growth statistics of the IT industry in India. He said that today the value of IT industry in India is $160 billion where 35 lakh people are employed. By 2020, the industry will touch around $250 billion generating employment opportunities for five million people.
In India today, there are 18,000 startups which have attracted an investment of $75 million this year. Bengaluru has two thousand startups. Almost every year we get VC capital of $10 million. We expect the seed capital to touch $300-400 million this year. In the next 10 years, we will have one lakh startups in India generating employment of around 300 million people.