Recently Funded startups in India

ET Bureau

(These funds are looking…)

By Madhav Chanchani

BANGALORE: Two of India's top early-stage investors, Kae Capital and Blume Ventures, are raising new funds within two years of inception with an aim to create new pools of capital to support fledgling ventures.

These funds are looking to bridge the gap between abundant seed funding and slightly scarcer venture capital in India's booming startup ecosystem. The two Mumbai-based firms will begin the process of raising new funds by June.

"The larger fund will primarily help invest in follow-on rounds, " said Sasha Mirchandani, founder of Kae Capital. "The new fund will certainly be larger than the current $25 million, " he said.

Blume Venture, which raised Rs 100 crore from domestic investors in July 2012, expects to raise $50 million for its second fund, this time around the fund will also raise money from foreign institutional investors.

"You can only go deep when you have the money and do not have to sit on the sidelines, " said Karthik Reddy, cofounder of Blume Ventures which has invested in companies such as car-rental service Taxiforsure, robotics services provider Grey Orange Robotics and cleantech firm Carbon Clean Solutions.

In the past two years there is a sharp increase in the number of seed-funded startups looking for the next round of funding in India with the proliferation of angel networks and accelerators. There are about a dozen active accelerators and about six major angel network groups in the country.

But many of the startups backed by them do not have the requisite size to be attractive enough for venture funds that typically provide the next level of capital. Last year while the number of seed and angel deals doubled to 226, the number of first-round venture capital deals dropped to 61 from 128 in the previous year, according to industry estimates.