Bengaluru: Angel investors Naganand Doraswamy and Prashant Deshpande; T.V. Mohandas Pai, co-founder of venture capital firm Aarin Capital; Rajiv Mody, managing director of Sasken Technologies; and Amit and Arihant Patni, founders of Nirvana Venture Advisors, have launched a 125 crore fund called Ideaspring Capital to invest in home-grown product start-ups.

The fund will invest in technology start-ups with differentiated intellectual property (IP), in domains such as financial technologies, healthcare and internet of things, among others.

The fund plans to participate in seed deals, where it will invest up to 3 crore, as well as series A or pre-Series A deals, where it will pump in another 5 crore, said Doraswamy. Ideaspring will pick four-to-six bets every year and close 15-18 deals in the next three years.

Ideaspring plans to handhold its portfolio companies in the first 18 months of their lifecycle and help them with customer feedback and product development.

“Fundamentally we believe that the enterprise market is a larger cycle. There are several peripheral areas where an entrepreneur, when they put their nose to the ground, tend to not give enough attention to. That may include getting customer feedback from Day 1, make sure the product is designed to suit the global market from Day 1. And most important is connections. These are the areas where we will work with the start-ups," said Doraswamy.

While a number of micro-venture capital firms—ones with a fund size of $15-30 million, such as Ideaspring, Unicorn India Ventures, VentureCatalysts, Endiya Partners and Utilis capital Advisors—are active in India, a number of bigger venture capital firms such as Matrix Partners, Sequoia Capital, Helion Venture Partners and SAIF Partners have started investing in early-stage start-ups.

The quantum of investment in early stage start-ups have, however, shrunk in quarter ended 31 March as against the quarter ending 31 December.

According to Prequin, a London-based research firm, at the angel and seed stages, investors closed 146 deals worth $35 million. That represents a 46% drop in value terms when compared to the fourth quarter of 2015 ($65 million in 139 deals), even though the volume of deals grew 5%, Mint reported on 8 April.

“The early stage, which is up to a million dollars and little bit more is still very vibrant, given the quality of the entrepreneur and the idea. On valuations, entrepreneurs have started facing a pushback," said Arihant Patni.

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