ZNL Ventures, an early-stage "India First" focussed fund based in Silicon Valley, has just announced a new fund. The new $3 million fund will focus on ideas that want to go after the B2B business in the US.
This new-age fund’s mission is to create the strongest community of founders, investors, and evangelists aligned with its “India First” mantra. With a Silicon Valley experience deep-rooted in Indian culture, it plans to bring in success for early-stage startups.
ZNL also assists its portfolio companies with business development, raising future rounds of funding, hire talent, and advice on their India-US growth strategy.
Partners Amit Jain and Sunil Ranka caught up with YourStory on why they are taking the cross-border deal flow story seriously.
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Edited excerpts from the interview.
YourStory: You have garnered interest with Y Combinator and 500 Startups and you are the only Indian fund to invest with 14 Y Combinator startups. How did you manage that?
Amit Jain: Our current portfolio companies are backed by Y Combinator, 500 Startups, Z Nation Lab, Alchemist, and FalconX, among others or VCs and top angel networks in Silicon Valley.
If you align with our “India First” mantra, we would be excited to talk to you. With the India growth story, we saw an increased number of startup participation in leading US accelerators.
With the rise of India's consumption story and enterprise capability, startups from India want to build their presence in Silicon Valley for accelerated growth. At the same time, to benefit from India consumption, global startups want to move into India.
Sunil Ranka: Currently, the investment ecosystem is very fragmented with VCs funding in only larger ticket size and angel investors regionally connected. Being from a different culture, early-stage investors from the West prefer to co-invest with a trusted party who understands India and the US market well.
We want to democratise investments for Indian founders by becoming their go-to fund and a reference point in the US.
For global investors who want to be part of the India consumption/market/growth story by investing in Indian-founded US incorporated companies at early stages, we become the unique systematic option.
YS: What is the unique value proposition?
SR: We have a great understanding of India-US corridor and we are well-networked in the Silicon Valley and India based investor ecosystem. We have invested in 14 Y Combinator startups and we are a community of ‘IndiaFirst’ founders and investors.
For Indian investors, if their startups from India perform well, raising money in the US in the next round will be easier. Also with ZNL, investors will have access to early-stage startups incorporated in the USA.
In these cases, ZNL ventures becomes a systematic vehicle with all the backend support and legal support/process for Indian investors to participate in these opportunities.
YS: How do you make investment decisions when startups go cross border?
AJ: When startups get selected by any of the accelerators in the US mentioned in the earlier answer, we get access. We have launched our next 2020 fund – interested investors can reach out to us for more details. Our current investments include startups like GMetri, Local, Khabri, Fampay, and Ubits.
Recently, one of our startups Hotify was bought by mid-sized IT company called Sonasoft. While we are interested in the consumption story in India, we also want to look at B2B enterprise software startups.
They should be in the field of Artificial Intelligence (AI), Robotic Process Automation (RPA) and digital transformation.
YS: Talk about the new fund.
AJ: The quantum of the fund and call money is $3 million and it will be called in three tranches at the start of each year. The funds will get deployed in three years with a cushion for the fourth year if we do not see the right deal flow.
About 50 to 60 percent of it will be invested as primary and the balance will be reserved for a double down. We have been talking to multiple people and are quite confident about closing this by February 2020. In total, we have done 16 investments, of which 14 were the Y Combinator investments.
Like any fund, we are focused on seven plus two years of extension with permission from investors. We invest up to $100K per startup. So, we’ll be targeting 10 to 12 startups a year.
(Edited by Saheli Sen Gupta)
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