Good Capital, an early-stage investor in unicorns such as Meesho and Lead school, has launched its second fund worth $50 million (₹410 crore) with a green shoe option of $15 million, general partner Arjun Malhotra said.
The VC firm, led by brothers and co-GPs Arjun and Rohan Malhotra, aims to back startups that are using AI in intelligent ways. However, it won’t just focus on AI businesses only.
“The way we see the opportunity is that AI is enabling a lot of interface developments, both around growth as well as user engagement,”Arjun Malhotra said in an interview.
“(Integrating AI) can really make a step change for any startup, and that creates a land-grab opportunity. I think it is as profound as what the shift from desktop to mobile was,” he added.
The latest fund comes about four years after the seed-stage investor launched its maiden fund worth $25 million in 2019. The VC firm actually ended up deploying about $45 million, which included further co-investments from its limited partners, in 25 startups, including OrangeHealth, SimSim (which was acquired by Google), and SolarSquare, among others.
So far, for the second fund, Good Capital has received commitments and marked an initial close for about half of the $50 million fund, Malhotra said. It aims to make the final close by April next year.
The fund also plans to invest up to $1.5 million in about 25 startups or slightly more over the next four years.
However, this time, Good Capital is looking to cut larger cheques than before which was about $500,000.
“Now, it will be more because (even as) the entry cheque size is probably going to be a little bit higher, but there’s more money to follow-on,” Malhotra said. “We can also do initial cheques larger than a million dollars.”
It has reserved about 35-40% of its capital for follow-on funding.
Good Capital’s investment strategy, however, isn’t focused on specific sectors.
“Our approach has been a lot more bottom up in terms of trying to find entrepreneurs. We’re operating in spaces that probably are not as well covered in the mainstream, but where founders find a really unique insight, (they can) extrapolate and create a really large opportunity,” Malhotra said.
Its LPs are based in Singapore, Europe and the US. With the change in global factors, the firm expects more early-stage capital to flow into India, which is emerging as a bright spot amid tough markets worldwide.
