Indian tech billionaire launches $100m fund to build longterm companies

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The Merriam-Webster dictionary defines fundamentum as “a logical basis or ruling principle.” The more familiar adjective ‘fundamental’ is derived from this. And in Indian engineering colleges, where students can be seen toting books on the fundamentals of this or that, the shortened version ‘funda’ is preferred.

That’s a logical basis of sorts for the name of a new growth stage fund for startups, launched today in India: The Fundamentum Partnership. Indian tech billionaire Nandan Nilekani, co-founder of IT bellwether Infosys, has partnered with venture capital veteran Sanjeev Aggarwal for this US$100 million fund, whose initial corpus may be extended to US$200 million.

While India has earned recognition as a startup nation, it is as yet an unproven scale up nation.

The ‘funda’ for this new fund is to help startups that have got product-market fit and initial momentum to scale up. The aim is to support the building of durable tech companies that are either tackling Indian problems or leveraging Indian advantages to serve global enterprises. The ticket size for investment will range from US$10 million to US$25 million.

Nilekani, who co-founded Infosys with six others in 1981 and saw India become the leading destination for IT services in this millennium, has been an active participant in the tech ecosystem after relinquishing his CEO post at Infosys. He helmed a government initiative to give a unique ID number to every Indian, called Aadhaar, which has registered more than a billion people. He has also been an angel investor in startups.

“I have thoroughly enjoyed looking at how Indian entrepreneurs identify original Indian problems and then solve these with application of technology,” says Nilekani. “India continues to be blessed with phenomenal entrepreneurial talent and the attempt with this platform [Fundamentum] will be to see how we can amplify their success.”

He intends to step away from direct investments in startups and focus on identifying candidates for Fundamentum and mentoring them “in areas like leadership and organization development, building a scalable tech architecture, and navigating inflexion points like capitalization and inorganic growth.” In a departure from industry practice, neither Nilekani nor his partner will take a fee or carried interest for managing the fund.

Startup to scale up

Nilekani’s partner Aggarwal will have a dual role. He will continue to manage VC firm Helion, which he co-founded after selling his business processing company Daksh to IBM in 2004.

“While India has earned recognition as a startup nation, it is as yet an unproven scale up nation. Ten years ago, with Helion, the attempt was to participate in creating a ‘startup’ ecosystem in India, and now with Fundamentum we want to help build a much needed ‘scale up’ ecosystem in the country,” explains Aggarwal.

Fundamentum intends to rope in other tech veterans and entrepreneurs from the Indian ecosystem as mentors and investors.

Some of Nilekani’s other co-founders are already engaged with the startup scene. Kris Gopalakrishnan and S.D.Shibulal, along with senior Infosys execs Ganapathy Venugopal and Srinath Batni, co-founded Axilor, an accelerator that also supports startups with early stage funding. Narayana Murthy and K.Dinesh have made investments from their personal funds. Former CFO of Infosys Mohandas Pai has also been an active investor.

But Fundamentum takes it to another level, identifying a vital missing link in the local ecosystem – the funding and support structure for more startups to cross the US$100 million scale barrier and set an example for others to follow. As iSPIRT co-founder and prolific angel investor Sharad Sharma pointed out to Tech in Asia in an earlier interview, only a minuscule percentage of startups being founded in India have hopes of reaching a valuation of US$100 million. “The ecosystem needs to have some minimal level of success for it to get escape velocity,” he said.

 

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