Karnataka govt-backed KITVEN launches Rs 20 crore fund for AVGC sector

Karnataka government had first announced plans to create a dedicated fund in its revised draft AVGC policy that was released in November 2023.

Karnataka Information Technology Venture Capital Fund (KITVEN), a fund backed by the Karnataka government, has unveiled a dedicated fund for the Animation, Visual Effects, Gaming, and Comics (AVGC) sector with a corpus of Rs 20 crore.

The fund announcement was made by P V Harikrishnan, CEO of KITVEN Fund during a panel discussion at the Bengaluru GAFX (Gaming, Animation, Visual Effects and Comics) 2024 conference.

The fund will invest between Rs 0.5 crore and Rs 2 crore in early-stage startups and small and medium businesses (SMEs) in the AVGC sector. The investments will be in the form of equity, preferred capital (convertible/redeemable), debentures or a combination of these instruments.

Karnataka government had first announced plans to create such a fund in its revised draft AVGC policy that was released in November 2023.

"The launch of the KITVEN Fund-4 AVGC represents a significant step towards fostering innovation and development in this field. This initiative not only highlights the government's commitment but also paves the way for potential growth and advancement in the sector" said Kislay Shashwat, Principal at Lumikai Fund, a gaming and interactive media-focused venture fund.

Srivastav, Secretary General at the Skill Online Games Institute said, "With this launch, the state has become the first in India to set up a fund to encourage the AVGC sector. This is a recognition of the potential in the AVGC sector and especially the enormous potential of online games for innovation and employment generation."

Vivek Ramachandran of Matrix Partners, an early-stage venture capital firm, also welcomed this move and said it will encourage aspiring students and ideators to utilise this opportunity to pursue their startup dreams.

Since 1999, KITVEN has invested over Rs 200 crore in startups through four sector-focussed funds in the areas of Information Technology (IT), biotechnology, semiconductors, and other knowledge-based sectors to date. The fund has invested in about 51 startups and has exited from about 26 of them, Harikrishnan said.

Apart from this fund, the Karnataka government also plans to provide special incentives and R&D grants for companies focusing on mobile-first products, as part of the the proposed AVGC policy.

In addition, it aims to provide various financial support measures including reimbursement for skill development and job creation, covering marketing, infrastructure, and compliance costs for early-stage startups, grants for the production of animation films, series, VR/AR/VFX projects, and game development, R&D incentives, and technology adoption support for acquiring new tools and software.