Nandan Nilekani-backed Fundamentum targets ₹2,200 crore for third VC fund
Speaking to Fortune India, co-founder Sanjeev Aggarwal said while the first close is expected in six months, there is already a lot of interest from both global limited partners and domestic entrepreneurs at large in the fund raise.
Nandan Nilekani and Sanjeev Aggarwal founded venture firm Fundamentum is looking to raise ₹2,200 crore for its third fund, with a ₹400 crore greenshoe option. While the firm has already secured Nilekani as an anchor LP with a sizeable cheque, making it his largest investment in any VC firm, the exact number has not been disclosed.
Fund III will be led by co-founder Sanjeev Aggarwal, Prateek Jain, Mayank Kachhwaha and CFO Sanjay Chaturvedi. Speaking to Fortune India, co-founder Sanjeev Aggarwal said while the first close is expected in six months, there is already a lot of interest from both global limited partners and domestic entrepreneurs at large in the fund raise. “Unlike 2006 when we started Helion, the only source of capital was global pools of capital. Now the fundraising environment is a lot more diversified. So, a lot of Indians are beginning to appreciate venture capital as an asset class, which was not understood earlier. I think the momentum is very strong,”Aggarwal added.
Fundamentum’s focus remains on Series B, early-growth stage companies with cheque size between ₹100 to ₹150 crore. The third fund will continue to be multisectoral focused with AI-native and AI-enabled businesses at its investment core. Aggarwal further said the deployment focus of the third fund, especially around AI businesses, would be in those companies that serve domestic consumption and AI services serving global enterprises.
On domestic consumption focused AI businesses: “Our belief is that it will be a vertical SLM (small language model) play for India specific problems, people will write their own micro models. So, India would be a very good vertical SLM factory. The other thing is that this is the next 400 million Internet users.” For the cohort, Fundamentum is also looking at startups in sectors such as education, healthcare, financial services, content, and the fund would look at the next 400 million internet users, where AI would be providing access, interface, through vernacular and voice-based feature offering.
Elaborating on other bets for the third fund, Aggarwal said that India also has the potential to become the FDE (forward deployed engineer) factory for the world. “We have a very good advantage because we have a very strong local industry on which we can train our people and models and then export it globally,” he said.
From the earlier Fund I (2017) and II (2022) Fundamentum has made a total of 17 investments across Consumer Internet, Bharat apps, Fintech, B2B Commerce, Enterprise Technology with a portfolio that includes companies such as Spinny, Pharmeasy, Kuku, Apnamart, AppsforBharat, FlexiLoans, Stable Money, Transbnk, Olyv and ProcMart. According to the firm, Fund II is at gross IRR of 26%, with a year-on-year portfolio growth of 123%.
Sharing his views on the recent set of new-age tech IPOs and their value post listing, Aggarwal alluded to the high valuations resulting in a high IPO price which subsequently put a lot of pressure on the stock with fundamentals not justifying the valuations. “I think now we have learnt that you have to price assets very, very carefully and there is more discipline. Even the public market investors, especially the institutions who build the book, are now very tight on valuations. Hopefully you will see that this mispricing is getting corrected,” he added.