India Dealbook: JSW to float VC fund, Capillary Tech raises funds

Visual from the Capillary website

Indian startups continue to attract the interest of investors. The latest to join fray is JSW Group chairman Sajjan Jindal, who has floated a venture capital fund JSW Venture Fund of about Rs 100 crore to invest in early-stage startups in the internet and technology space, as per a report in The Economic Times.

In another deal news, software maker Capillary Technologies  has raised about Rs 300 crore ($45 million) in a round led by New York-based private equity firm Warburg Pincus, signalling rising investors’ interest in enterprise technology startups, says an ET report. Capillary has already used a significant portion of the fund to acquire two firms in the technology space – digital commerce solution provider MartJack and machine learning startup Ruaha Labs. It has also picked up a minority stake in CloudCherry, a customer satisfaction management firm.

India is poised to see a rapid growth in the number of product startups by 2020. At present, there are around 3,100 startups in India, and the number is expected to surge to 11,500 by 2020-end, according to a study by IT industry association Nasscom. With increasing numbers of online active users becoming consumers of e-commerce solutions, Indian startups today are building global digital solutions to capitalise on this rapid growth.

To cash in on this opportunity, JSW Venture Fund will come into play soon. The fund will invest proprietary capital of the family, and will be managed by Sajjan Jindal’s son Parth Jindal, who is currently pursuing an MBA at Harvard Business School. The group has also roped in Gaurav Sachdeva, former general manager of strategic investments at Brand Capital, to set up the fund from scratch and lead it.

While the approval of Sebi awaits the new venture, JSW group has already begun discussions with other venture capitalists and entrepreneurs for partnering in future investments. The fund will focus on deals worth Rs 3-6 crore across sectors such as e-commerce, business-to-business services, and tech-oriented and enabling startups.

Indian startups today have access to multiple sources of funding ranging from venture capitalists, private equity and angel investors to banks, financial institutions and incubators. Nasscom has also predicted that with this growth pace, as many as 2.5 lakh jobs are expected to be created by tech startups by 2020.