Early-stage venture capital firm Arkam Ventures announced on June 27 the launching of its Fund II with a target corpus of $180 million, in what is the latest instance of a VC firm raising money amid a tough macro environment.
Arkam's Fund II will continue to focus on areas like financial services, skilling, food, agriculture, healthcare, mobility, and software-as-a-service (SaaS) and will also explore areas like mobility, infrastructure intelligence, and recycling-related startups in its portfolio.
"Investors had been taking stock of their investments and evaluating their existing portfolio as to how much more cash needs to be infused...internal rounds were also taking time and the valuations were still clinging on to 2021-2022 levels and that needed time to correct. But now there is more clarity" Said Rahul Chandra, Managing Director of Arkam in an interaction with Moneycontrol.
"The deal velocity is much less now, if a deal took two weeks to get over earlier, it is now taking two months. However the deals are picking up now and in fact, funds are looking for startups," Chandra added.
Arkam was Started in 2020 by Chandra, who was the former managing partner at Helion Venture Partners and Bala Srinivasa former partner at Kalaari Capital. The firm launched its fund I in 2020 with a corpus of $106 million out of which it has invested in around 16 startups and will further invest in about three more startups.
In fact, Arkam is planning to invest about $25 million from its new fund II in its existing portfolio companies.
Its portfolio currently consists of 16 startups including fintech firms such as Jar, and Kreditbee, Food/Agritech companies like Jai-Kisan and Jumbotail, skilling companies like Smartstaff and Cusmat as well as SaaS companies like Spotdraft and Signzy. Presently, the aggregate market value of the Arkam portfolio exceeds $2.5 billion.
"There are clearly some winners emerging out of our Fund I and we are keen to invest further into those companies...winners are those companies that show a clear path to profitability, and are category winners. These are companies we have backed and know well, " Chandra said.
Chandra added that he is excited about Startups like Smallcase, KreditBee, Jar, SpotDraft and Jai Kisan within Arkam's portfolio companies.
Current Arkam Fund I investors include British International Investment, SIDBI, Evolvence, Quilvest, US Institutional Investors, and large family offices.
Amid multiple instances of governance lapses in the startup ecosystem, like the latest incident of the health tech startup Mojocare where the founders confessed to its investors on inflating revenue, Chandra said that Arkam focuses on building the governance muscle early-on in a startup and takes up its role as a board member seriously.
"We expect startups to instill a higher degree of transparency... Governance is not just about financial governance to us, it also involves proper work culture and formal organisational structure...Coming from an industry background we help founders in transforming into a company from a startup" Chandra said.
Arkam’s Fund II is expected to announce its first close by October and will close the fund at the end of the year. It will build a portfolio of 20 tech startups.
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