Nilekani, Sanjeev Aggarwal launch fund to back mid-stage startups

Nandan Nilekani, co-founder of Infosys and the first head of the Unique Identification Development Authority of India (UIDAI), has teamed up with venture capitalist Sanjeev Aggarwal to launch a $100-million venture fund to back mid-stage startups that solve unique Indian problems in consumer technology.

Nandan Nilekani and Sanjeev AggarwalThe venture, which has been dubbed 'The Fundamentum Partnership', will look to lead investment rounds of $10 million to $25 million. It will have an initial corpus of $100 million and will be extended to $200 million if opportunities come along, the duo announced in Bengaluru on Monday.

While Fundamentum is looking to back companies that target India's domestic economy, it also sees opportunities in backing enterprise technology firms and outsourcing companies that serve global corporations - a model Infosys helped pioneer to become India's second-largest software exporter.

In an interview with The Economic Times, Nilekani said, ''I will not make any more investments as an angel but I will continue in my current investments. Whatever time I allocate to the startup ecosystem will be through Fundamentum and for my current startups.''

Until now, Nilekani has only been an angel investor in start-ups such as ShopX, RailYatri, Sedemac and Power2SME, pumping in small amounts of his personal wealth and mentoring founders. With Fundamentum, Nilekani will institutionalise his investments through a venture capital firm.

''I have thoroughly enjoyed looking at how Indian entrepreneurs identify original Indian problems and then solve them with application of technology. India continues to be blessed with phenomenal entrepreneurial talent and the attempt with this platform will be to see how we can amplify their success,'' Nilekani said.

Fundamentum will not only attract personal investments from Nilekani and Aggarwal, who is a co-founder of Helion Ventures, but also capital contributed by a set of institutional investors as well.

Both the founders will, however, not charge any management fee or carried interest for running the fund.

''While India has earned recognition as a start-up nation, it is as yet an unproven scale-up nation. Ten years ago, with Helion, the attempt was to participate in creating a 'start-up' ecosystem in India and now, with Fundamentum, we want to help build a much needed 'scale-up' ecosystem in the country,'' said Aggarwal.

Nilekani joins other Infosys founders such as N S Raghavan, N R Narayana Murthy, Kris Gopalakrishnan and S D Shibulal to set up venture funds that back start-ups and entrepreneurs in the country. Raghavan, a co-founder of Infosys who retired as deputy managing director in 2000, had set up Ojhas Ventures that has backed several tech and health care start-ups in India.

Murthy had set up Catamaran Ventures, which has backed firms such as Paper Boat and CloudTail, a joint venture with Amazon for the Indian market. Gopalakrishnan and Shibulal formed Axilor Ventures that incubates start-ups as well as backs those doing research in core technology and science.