Venture capital firm VenturEast Funds launched its seventh fund, called VenturEast Proactive Fund, which will invest $150 million (Rs590 crore) into technology across early-stage and growth-stage companies.
Out of the $150 million, $96 million has already been raised by the firm, which is headquartered in Chennai and Hyderabad. The fund will focus on businesses that serve small-and medium-enterprises and lower economic segments.
This brings the firm’s total funds under management to approximately $300 million. Investors in the fund include US-based Argonaut Private Equity, Saudi Economic and Development Co., Life Insurance Corp. of India (LIC) and International Finance Corp. (IFC).
Mint had reported on 12 October that VenturEast would be raising new funds worth $150 million for technology and life sciences. VenturEast gave additional details on its plan on Wednesday, explaining that $150 million will be dedicated to technology alone. The life sciences fund (the firm’s second fund for this sector) will be launched early-2008, but the size has not yet been decided.
VenturEast’s structuring of the fund around a technology theme, though across stages and segments, is unique. Most funds focus on early or growth stage investments, with only a few exceptions. VenturEast will invest up to $5 million for early stage businesses, with most of them being around $2 million, which will likely be “builders of technology.” It will invest up to $10 million for growth stage businesses that are “users of technology.”
Co-investment deals with other VC firms will not be a preferred strategy unless a deal is too large for a solo investment, the firm said.
The fund will focus on businesses that provide affordable and customizable technology solutions that are easy to implement. It will also focus on what it calls the “digital divide/bottom of the pyramid markets,” the firm said. This would imply businesses with technology that helps mass entertainment, connectivity and renewable energy.
VentureEast used to be called Andhra Pradesh Industrial Development Corp. Ltd Venture Capital (Apidc), and began as a public-private partnership in 1995 when Apidc held 49%. Now, the fund has been privatized and Apidc holds 1%. Over the last 12 years, the firm has raised a general fund, biotech fund, two seed stage funds, life sciences fund and is working on a micro-equity fund.
The Proactive fund currently has three partners—Sarath Naru, Raghu Mendu and Siddhartha Das.