Mumbai: Venture Gurukool, a mentoring platform for early and growth stage ventures, is planning to launch its maiden fund called VG Coop Fund with a target corpus of $20 million towards the end of April, said founder Mahendra Swarup.
The fund, which will have a green shoe option to raise another $20 million, will invest in business-to-business and consumer technology start-ups. According to Swarup, the firm has tied up with three large Chinese investors who will be co-investing with Venture Gurukool.
“We are floating a small fund, where we will first identify such ventures that have similar successes in China. The Chinese only want to invest in spaces they are familiar with and they have had successes in China itself. The idea is not only to fund Indian start-ups but to build great businesses based on successes overseas which are pre-aligned with strategic partners/investors, ensuring a clear path to exit,” said Swarup. Before setting up Venture Gurukool, Swarup was a managing director with India-focused private equity fund Avigo Capital.
The investment from VG Coop Fund in the form of seed funding would be complemented by large Chinese strategic players and venture funds in the form of pre-series and series A investments.
“We will initially provide seed funding and Chinese investors will come in for pre-series and series A. The model is that we will invest in start-ups which are mirroring businesses which have succeeded in China,” said Swarup.
VG Coop Fund intends to raise a majority of funds from the domestic market (60-70%), while the rest will come from geographies such as China, Taiwan, South Korea and Indonesia. Swarup believes that the next round of investment in Indian start-ups will come from China and not from the US and Europe.
“China has almost seen a saturation point and so they are looking at large markets. China is all about scale... Chinese investors find India as the only other market where the market can scale up,” said Swarup.
India is a natural partner for China because of the size of the market, similarity in demographics and consumer behaviour, and the presence of opportunities to scale up on the back of increasing mobile penetration, he added.