Mumbai: Singularity Ventures, a seed fund, which has offices in Chennai, New Delhi and Chicago and is backed by West Asian investors, has launched its operations in India with an initial corpus of $5 million (Rs19.65 crore)-$7 million.
The fund, part of Amman, Jordan-based private equity firm CST Holdings, has investment from an undisclosed group. The launch of the fund is an early sign of West Asian investors beginning to get comfortable in investing in India’s early-stage companies. While seed investors such as Indian Angel Network and Erasmic Venture Fund have seen sporadic interest from that region, most of the West Asian interest has been in later-stage private equity funds.
If the trend moves into early stage, it will allow seed funds to better diversify their sources of capital. Similar to private equity, seed and early-stage funds have long been dependent on US money, notably from Silicon Valley-based investors. Getting a mix investors will help fund managers to shield their funds from regional economic downturns.
The $5-7 million corpus that Singularity launches with will be invested over eight months, after which the amount is likely to be renewed at similar intervals. Partners Tejus Sawjiani and Vishwa Chandra said they will be looking for start-ups that match the strategic interests of their investors, who primarily comprised chief executives of some top corporate houses they have worked with closely in the past. They said the link between West Asia and India has not yet been explored like it has been with China and that it will be a niche for them.
The fund will invest Rs1-4 crore in start-ups in the healthcare, consumer products, retail, financial and technology sectors. It will look to invest in firms with a prototype and basic management structures in place, but will also look to put under Rs1 crore in firms with unique concepts even if they have no revenue.
Prashanth Prakash, general partner at Bangalore-based seed investor Erasmic Venture Fund, said he has recently seen more interest from West Asia in Series A investments, or first-round funding, and expects a natural progression towards pre-series A seed investment.