Brigade Group and Gruhas partner up for Rs 300 Cr Earth Fund

The Earth Fund on Tuesday partnered with Nikhil Kamath and Abhijeet Pai-led Gruhas to launch a new fund with a corpus of Rs 200 crore, with an additional Rs 100 crore in green-shoe option.

The Earth Fund is a sustainability and proptech-focused investment fund, set up under Brigade Group’s Zoiros Projects Private Limited.

The new fund aims to invest in 10 to 15 startups with an average ticket size of about $1-$2 million. Additionally, the fund will also reserve 30% of capital for follow-on rounds in about five to six companies, according to Nirupa Shankar, Joint Managing Director at Brigade Enterprise Ltd.

The fund will focus on startups across urban tech, encompassing construction tech, real estate solutions, asset utilisation, and sustainability, including climate tech, clean tech, and energy solutions.

Brigade and Gruhas are investing Rs 50 crore each, accounting for 30% of the fund, along with other limited partners, including builders, high-net-worth individuals, and family offices.

The two firms expect to start deploying the capital in a couple of months till the next two to three years, with 50% of the total capital used in the first year, 30% in the second, and 20% of the drawdown happening in the third year. Following dispersal, the fund will look to exit companies from the sixth or seventh year.

This is Gruhas' second partnership for a fund. Last year, the firm partnered with Collective Consumer Fund to launch a Rs 150 crore fund to invest in consumer-focused startups.

The new fund also comes at a time when the rising migration of people to urban areas increases the scope for innovation in the urban tech segment. Additionally, the COVID-19 pandemic was a huge catalyst for the real estate sector to adopt technology, according to Shankar, which has resulted in a rise in the number of startups operating in this segment.

“The real estate industry is typically known for having lower productivity because of the low adoption of tech. So some of the technologies that we'll be looking at are to see how can we make the industry or the build world more efficient and also deliver better customer value,” Shankar added.

The fund has raised about 40% of the total capital, which has been primarily domestic and will close the fund in a couple of years.