Pi Ventures, an early-stage venture capital firm, is looking to raise Rs 195 crore for its first fund, which will look to finance start-ups in artificial intelligence, machine learning and Internet of Things (IoT).
The fund, formed earlier this year by Manish Singhal and Umakant Soni, is currently on the road to tie up commitments.
“We are raising commitments from both domestic as well as overseas investors. Typically, we would like to be the first institutional investors in these start-ups. We are entrepreneurs first and would like to work with the company early on, whether at the idea stage or product market fit stage,” said Singhal, founding partner of pi Ventures.
The fund has raised commitments from institutional investors and entrepreneurs like Sanjeev Bikchandani, founder of InfoEdge India Ltd, the parent company of Naukri.com, and the founders of Sling Media Inc. The fund is likely to become operational in another couple of months.
The fund will look to invest in around 20 start-ups, making very early-stage bets in companies and follow-on investments till the series A stage, said Singhal.
Before launching pi Ventures, Singhal co-founded LetsVenture.com, a marketplace for start-ups and early-stage investors in India. He has also made angel investments in several start-ups such as Locus, DropKaffe, Witworks, AdSparx and ApartmentADDA.
Soni was previously associated with Science Inc., a US-based start-up studio, as its India director. Prior to that, he founded an artificial intelligence start-up called Vimagino, which focused on chat bots for support. Both Singhal and Soni are Indian Institute of Technology-Kanpur alumni.
The idea to launch pi came to Singhal after his investment in Locus, an artificial intelligence start-up focused on the logistics sector.
“At large volumes, managing and optimizing logistics operations can become a very challenging task. That’s the problem Locus was solving through machine learning. I led their seed round last year and that got us studying this space more closely in June-July last year to understand what activity was happening in this space in India,” said Singhal
They realized that with so much data around, every product in the future will need a layer of artificial intelligence and machine learning to make sense of it in real time and remain competitive, he said.
“This is happening not just in India but across all geographies. Since this is a specialized field, one needs a specialized focus from an investment thesis point of view to crack this space,” added Singhal.
According to him, several factors are propelling the adoption of technologies such as artificial intelligence, machine learning and IoT in the Indian market, making it an opportune time for investors to look at such start-ups.
“There is a lot of data that we are generating today and the computation power to churn this data is available today. Also we see a lot of willingness of businesses to adopt these new solutions to grow their businesses and run them more efficiently. On top of all of this, today, you have a lot of talent available in these fields,” said Singhal, adding that all these factors had ensured the emergence of a large number of start-ups in these fields.
When they started out with the fund, the first question was whether there were enough companies in these fields, he said. “Today, we meet around 4-5 companies every week,” Singhal added.
On the artificial intelligence front, there is a lot of start-up activity in sectors such as fintech, health care and logistics, he said.
The fund-raising by pi Ventures comes at a time when about two dozen private equity and venture capital (VC) industry executives are on the road to raise up to $2 billion for their new funds, Mint reported on 29 July.
Several of these new funds are betting on the early-stage consumer internet/technology ecosystem in India. These include funds such as Unicorn India Ventures, Pravega Ventures, Stellaris Venture Partners, WaterBridge Ventures, Endiya Partners and Parampara Capital.
“We are seeing a lot more micro VC funds enter the market, focused on early-stage and seed round investments and targeting disproportionately huge returns. Fund managers are also preferring to do a first close of a smaller round, given the tougher fund-raising environment,” said Karthik Mahalingam, national practice head-venture capital at corporate law firm Shardul Amarchand Mangaldas.
Apart from the regular limited partners, there seems to be increased activity from domestic and foreign high net-worth individuals and family office money, which is aiding this fund-raising, he said.
“There has been a lot of traction in start-up investments in India, particularly in the last one-and-a-half years, and one can see some newer investors trying to grab a slice of the action,” he said, adding that the corrections in this market had helped entrepreneurs and investors to be more realistic on valuations and commercial expectations.