Varanium Capital, a portfolio manager that offers investment and advisory services, said it plans to raise a ₹200 crore fintech-focused early-stage venture capital fund.
The Varanium NexGen fund plans to invest ₹2-5 crore each across 35-40 fintech startups at a seed or pre-series A stage, Aparajit Bhandarkar, managing partner, venture capital, Varanium, said in an interview.
“We see fintech as an interesting opportunity because financial services represent more of the economy than any other sector. We have seen multiple winners in India and globally, and also see the government focusing on the sector, via Aadhaar, UPI payments," he added.
Prior to Bhandarkar, he ran ISME ACE, an accelerator programme for fintech startups in India.
The fund has already raised about ₹50 crore, marking its first close and plans to start investing soon.
While 10% of the fund is contributed by Varanium, the rest of the investors (limited partners) include domestic business professionals and family offices, including former Infosys chairman Mohandas Pai.
The fund plans to invest more in business-to-business, or enterprise-focused fintech firms, rather than consumer-focused firms, which generally need high amounts of capital to scale.
“The fintech fund also stems from our prior experience in financial services, and gives us the ability to raise capital from multiple pools," said T. S. Anantakrishnan, founder of Varanium Capital.
Given the cheque size, Varanium’s investments will compete with angel networks and high-net-worth individuals (HNIs), who invest by themselves. However, Anantakrishnan said Varanium will also be happy to co-invest as part of a larger round.
Fintech-focused funds have been a theme globally as well as in India.
For example, Ribbit Capital is a US-based fund which focuses only on fintech firms, and has been an active investor in Indian startups such as Policybazaar and Razorpay.