Capria Ventures to launch $100 million India-focused fund for applied GenAI startups in first half of 2024

The investments will flow into companies raising funds in seed and pre-series A rounds, Capria Ventures managing partner Surya Mantha said.

Venture capital firm Capria Ventures is gearing up to launch a $100 million India-focused fund in the first half of 2024, according to Surya Mantha, the firm's managing partner. The move is part of the firm's strategy to increase investments in the region, particularly in early-stage startups that have embraced generative artificial intelligence (Gen AI) as an integral part of their business strategy.

The development comes after the company closed investments worth $20 million last year from its $100 million Global South fund II in regions such as India, Southeast Asia, Latin America, the Middle East, and Africa.

The India-focused fund will invest in sectors such as fintech, job-tech, and software-as-a-service edtech.

“We are launching our fully India-focused fund (not Global South), a $100-million flagship fund, in the first half of 2024,” Mantha told Moneycontrol. The investments will flow into companies raising funds in seed and pre-series A rounds, he added.

Mantha said that AI has been identified to have a significant impact in almost all sectors, and investors are actively scouting for opportunities. “India is a big thrust area for us. We believe strongly that applied generative AI, in particular, will be critical to the long term success of businesses in which we invest,” Mantha said.

He further said that Capria Ventures ensures that the companies in which they invest have founders who are reasonably confident with credible plans. Additionally, they consider a reasonable amount of revenue, sound unit economics, and the ability to achieve profitability and cash flow breakeven.

According to consulting firm EY, generative AI’s cumulative impact on India’s GDP may range from $1.2- $1.5 trillion by 2029-30.

Capria Ventures launched its Global South fund II in 2023, with the aim of investing in 20-25 tech startups in India, Southeast Asia, Latin America, the Middle East, and Africa. According to Mantha, five investments have been closed from this fund and 3-4 are in the pipeline. He also said that about three deals are under active consideration.

Over the next quarter, Capria Ventures expects to complete 8-10 investments in total, Mantha said. The Global South Fund had earmarked about 60 percent of the $100 million for India.

Mantha said that the current environment for raising capital is not conducive, given that the funding winter has yet to abate. “As you know, companies are going through the so called “funding winter”. Funds too will have to reckon with LPs (limited partner) who are questioning the investments they made at frothy valuations during the “zero cost of capital” period,” he said.

Capria Ventures has thus far invested in companies within its targeted global South region, including Betterplace, BharatAgri, Eduvanz, and Edenfarm.

Capria Ventures, co-founded by Will Poole and Dave Richards, has offices in Seattle, Bengaluru, Nairobi, and Washington DC. The firm has over $1.25 billion in assets under management collectively.