Varanium Capital, a boutique asset management company, has marked the first close of its debut fintech-focused venture capital fund.
The Varanium NexGen fund seeks to raise a total of Rs 200 crore ($28.1 million), managing partner Aparajit Bhandarkar told VCCircle.
Bhandarkar said the first close was made at Rs 50 crore, and a few investors have committed another Rs 5 crore over the past couple of days.
He said that the LPs are largely domestic while some of the professionals are based out of Singapore and the US. The fund was registered with Securities and Exchange Board of India (SEBI) as category I fund in January. It got the market regulator's approval in May.
Bhandarkar added that the fund is now eligible to approach institutions like the state-run SIDBI managed fund of funds under the Startup India initiative and public sector bank sponsored venture fund Canbank Venture to get them on board as LPs.
"Typically to approach these institutions, a fund manager should have a past track record, the fund manager and owner should be the same individual and the fund should have raised 30% of the capital, which we have done," he said.
The fund will typically invest Rs 2-3 crore in a startup initially. The investment in a startup could go up to Rs 5 crore with follow on funding.
Varanium NexGen aims to invest across the fintech spectrum including payments, lending, insuretech, regulatory tech, cyber security, data analytics space and wealth management.
“We are looking deeper into fintech,” said Bhandarkar.
Within data analytics segment, it is looking at startups that are either helping make lending decisions or customer acquisitions; and within wealth management, it is looking at startups that are enabling international investments.
He also said that he has been anti-crypto currency right from the beginning. “I will be in the minority among fintech fund managers as I don't understand crypto," Bhandarkar said.
In India, there is a strong regulatory skepticism against cryptocurrencies and a government panel in June recommended banning all private cryptocurrencies.
Separately in a statement, Varanium said that it has set up Aimcrest.com, a portal that connects startups to investors and corporate customers. Aimcrest has partnered with Maharashtra state government founded “Mumbai FinTech Hub”, for implementing the state fintech policy.
Bhandarkar, who has an MBA from NYU Stern, has over 17 years of banking and investing experience. Prior to joining the fund, he has been a seed investor and director at neobanking startup BankOpen.co and Trendelyne.com, a stock analytics platform, the statement said.
T. S. Anantakrishnan, the founder of Varanium Capital, will be actively involved in the fund and will be part of its investment committee. Jitendra Gupta, co-founder of Citrus, has joined as an independent member in the fund's investment committee while Amrish Rau, co-founder Citrus, joined the advisory board.
Citrus was bought by PayU, owned by South African Internet conglomerate Naspers, for $130 million (Rs 865 crore) in one of the largest takeover deals in India fintech sector in 2016.
There has been heightened interest in the financial technology segment over the past few years. According to a VCCircle survey, 50% of the respondents said they favoured the fintech segment this year.
Last month, seed-stage impact investor Accion Venture Lab said it is raising new fintech-focussed fund.
Quona Capital Management Ltd’s new venture capital fund that focuses on the financial services sector in emerging economies including India is also raising a new fund.
In one of the biggest funding rounds for a fintech venture this year, FreeCharge founder Kunal Shah’s Cred raised $120 million (Rs 862 crore) in August.
Other fintech firms including BharatPe, Open, NiYO Solutions, INDwealth, OfBusiness, OkCredit and Razorpay also raised significant venture capital money in the past months.
