IAN launches ₹1,000 cr fund

The IAN Alpha Fund will have a base investment corpus of about ₹650 crore (about $78 million) with an additional investment option of ₹350 crore (about $42 million), the fund’s investment committee member Saurabh Srivastava said.

The Alpha Fund will be led by IAN’s senior managing partner Padmaja Ruparel, and managing partners Jaideep Mehta and Vinod Keni. Mehta was previously the chief executive officer at HT Media-owned Mosaic Media Ventures.

IAN expects the Alpha Fund to make its first close in December or January at about ₹350 crore, while the final close is likely to happen in about 18 months from the first, Ruparel said in an interview.

The fund will have an investment timeline of about eight years, with an extension of up to two years. It is looking to invest at an early and seed funding stage, and is not considering a Series B stage of funding except for its own fund’s winners, Srivastava added.

The fund’s investments will be in three categories or buckets. The first bucket will include joint investments with angels, with IAN’s average cheque size at about ₹1.2 crore ($0.14 million). The second category includes top-up investments in firms where IAN has invested previously, while the third bucket shall comprise investments beyond its portfolio, with participation from other investors.

With the cheque sizes earmarked for their investee companies, Ruparel said IAN’s Alpha Fund is expected to make investments in about 100 companies comprising about 70 companies in the first bucket, and about 25 to 30 in the other two.

The fund said its cheque sizes will likely range from $1-5 million, along with co-investors. Ruparel said the fund is looking at larger cheque sizes as a long list of captive investors may not be “the best use of management time," thus, focusing on a similar number of investee companies as Fund I but with a larger quantum of investments. According to Srivastava, Alpha Fund will focus to solve “real problems" relevant to the Indian market while remaining sector-agnostic.

This will include sectors across cleantech, healthtech, agritech, edutech, fintech, and emerging sectors.

The Alpha Fund is aligned with IAN’s plans to invest in 500 startups with a ₹5,000-crore corpus, and will be aimed at creating nearly 50,000 jobs.

The fund will also focus on governance and compliance by startup founders, with IAN’s Sunil Munjal, Kris Gopalakrishnan and C.P. Gurnani spearheading the agenda.

The IAN Fund I, launched in 2017, invested in about 72 companies. While the fund’s investments have been completed, it is yet to exit from all the firms, Srivastava said. “The exits are still happening. 67% of the capital deployed has seen value creation with next rounds happening," Ruparel said. The first fund’s internal rate of return is roughly at 50%, she said, adding the investment has leveraged about ₹2,800 crores.

Some of IAN’s portfolio investments include Coolberg, FarmersFZ, SmartVizX, Druva Software, Uniphore, among others.