Nikhil Kamath, Collective Artists Network launch fund with Rs 150-cr initial investment

Vijay Subramaniam, Founder and Group CEO of Collective Artists Network and Nikhil Kamath, co-founder of Gruhas.

Nearly three years after launching Gruhas with Abhijit Pai, Nikhil Kamath, founder of broking company Zerodha, has launched another fund with talent management and influencer marketing firm Collective Artists Network in a bid to back consumer brands.

Gruhas Collective Consumer Fund has been launched with an initial investment fund of Rs 150 crore. "We have locked down on our first five investments in various spaces. And with two people coming together from two different genres (the joint venture between Gruhas and Collective Artists Network) we will have a multiplier effect. Seeing Nikhil’s (Kamath) track record and the level of disruption he has made in the Indian economy, we are confident and between the two companies we are underwriting 30-35 percent of the fund ourselves," Vijay Subramaniam, founder and Group CEO of Collective Artists Network, told Moneycontrol.

He added that they are looking to invest up to a million dollars in early stage companies.

The alliance's initial investments include backing a sexual wellness brand and an innerwear company among others. These investments signal support for transformative ideas across various segments within the growing creator economy, Subramaniam said.

"The timing (of the fund launch) is opportune. Right now we are in a sweet spot where the funnel for PE/VC (private equity/venture capital) money coming into India is reduced quiet a bit. So, the opportunity that exists today wasn't there 12 months ago. The cost of foreign capital coming in will remain reasonably high for some time, so we think the opportunity is there and timing is right. We expect the fund to be much larger in the coming years. While the first couple of investments are done already, the majority of investments will be done in the next 12 months," said Kamath.

He added that with the new fund they are looking to build a bridge between Bengaluru and Mumbai. "We are removing all intermediaries for distribution to come together with technology. We believe it would lead to more efficient companies. And the fund is a means of facilitating that," Kamath added.

Subramaniam noted that the idea was to marry the backbone of soft power of India which is entertainment, media and sports with venture capital.

On the funding winter in the startup ecosystem, Kamath said that the industry was in a bubble zone at some point. "If someone can borrow money for free and invest in India, the appetite for risk will be significantly higher than when they have to pay. Maybe we got too much money too quickly at one point of time. To be fair we benefitted from it as we got food and taxis for cheaper. Now the bubble is no longer there."

But he added that it doesn't take away much from the India story. "We believe in the India story and it will grow our dominance as a domestic consumer market, as a manufacturing market, and as a service-oriented market. A lot of these different domains of the Indian economy may not have done too well for the last six months or, maybe, three years but, 10 years down the line they will be bigger and we are working with a long-term outlook. Unlike foreign VCs, we are more long term partners to people," he said.

Subramaniam said that they are looking to back businesses that focus on technology. "I think as tech unravels and internet penetrates, more new categories will emerge. We are here to back meaningful businesses and founders who can build a brand," he said.