Nandan Nilekani's Fundamentum Partnership to double down investments with $227 mn second fund

Fundamentum Partnership, an early growth-capital fund floated by Infosys co-founder Nandan Nilekani and Helion Ventures co-founder Sanjeev Aggarwal, Fundamentum Partnership, has raised $227 million for its second fund. The company will double down on the number of investments from six in the first fund to 12 in the second fund, Ashish Kumar, Co-founder and General Partner of Fundamentum told Business Today.

From its initial plan of raising $150 million, the fund has been significantly oversubscribed. About 25 per cent of the capital was contributed by the Fundamentum team.  

Launched in 2017 with a fund size of $100 million, fund one is fully drown now with six investments, of which two -- online pharmacy PharmEasy and used car marketplace Spinny -- have become unicorns. Logistics SaaS start-up Fareye; hospital network Ayu Health, online trading platform Probo, and online travel portal Travel Triangle are its other investee firms.

"At Fundamentum, we tested the waters with the first fund. We now intend to go deeper into our investment program, focus on entrepreneurs creating built-to-last companies out of India, and steadfastly support them in their exciting journey," Co-founder and General Partner, Nandan Nilekani said in a statement.

The second fund will focus more on SaaS, healthcare, digital content and Bharat Apps, which is categorized as applications for the next 400 million users in India.

“We will accelerate our investments. We will also go deeper into our companies with follow-ons. Initially we used to lead a particular round, do our pro-rata in the next round and after that, we were happy to be diluted because our understanding was that many of the companies effectively cap up at about a billion dollars or so. We misread entrepreneurial ambitions as many of these companies are becoming larger. Now, in our mind, $5 billion should be the new definition of unicorn and that is what we would be targeting,” Kumar said.

He said the company has already identified two start-ups belonging to digital content and Bharat Apps segments which will mark the first two investments from the second fund. These transactions are likely to complete in a few weeks.  

Fundamentum will continue to invest in early growth start-ups with its entry valuation point being $50-150 million. The company aims to invest in 4-5 start-ups each year where it will lead or co-lead $25-40 million rounds with 10-15 millions of initial deployments.

He said the market scenario now offers a great opportunity for investors, especially for those in the growth stage. “I think we are probably sitting on an all-time high deal flow primarily because there are too many companies that got funded in the last two years, and all of them are now available for us to invest in because any company started 12-24 months back is the top of the funnel for us. We could be very selective about it. What we need to be aware of is that the macros for the next 12-24 months are anybody’s guess at this point in time, so any of the companies we are investing in should have enough capital to last this timeframe and be prepared that the next round may come in two or so. Also, even if the broader ecosystem may have fear, we will support our own companies that we truly believe in,” Kumar said.