Early-stage venture capital firm Fundamental VC has launched its maiden fund with a target corpus of $130 million.
The sector-agnostic fund will invest in pre-seed and seed rounds across consumer internet, healthcare, insurance, financial services, Software as a Service, gaming, and artificial intelligence, a senior executive told ET.
The Bengaluru-based firm is operating the fund on a zero-carry model unlike other funds that operate on the 2-20 model, where the general partners (GPs), or the managers of these funds, get 2% (of the fund managed) as management fee and take a 20% carry on the returns generated. Therefore, higher the returns, higher the carry.
The firm will raise the money in phases as parts of cohorts from investors. The fund will also deploy the capital in stages. Rather than waiting for the whole fund tenure to be over to return capital, the fund will periodically make payouts to investors.
The fund will invest up to $1.5 million in each startup, and aims to support 30 startups over a period of two years.
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“With a unique and differentiated model, Fundamental’s maiden fund is backed by an equal mix of domestic and international Limited Partners from geographies such as Singapore, Middle East, and the US,” said Saswat Sundar, cofounder, Fundamental VC.
The mix of investors comprise unicorn founders, high net-worth individuals, family offices, and senior technology executives who have long been associated with the early-stage startup ecosystem as operators, digital-first entrepreneurs, domain experts, and enablers who could facilitate cross-border expansion in terms of business growth and capital, Sundar added.
Fundamental VC is founded by former startup operators Sundar and Abhishek Rathi.
Both Sundar and Rathi have previously invested in their individual capacities in more than 20 startups such as Agnikul, Kenko, TradeX, BluSmart, StockGro, Dukaan, Elo Elo, and Redcliffe Lifesciences.
“In order to focus on the sustainable growth and success of each startup in our portfolio, we have a highly curative investment strategy, wherein we will invest in a limited set of businesses with sound fundamentals instead of a spray-and-pray approach. As a part of our portfolio growth strategy, we have created a ‘ready-to-scale’ stack to help our portfolio companies achieve PMF and scale,” Sundar said.
From a strategic support standpoint, Fundamental VC has exclusive partnerships with several industry stalwarts to facilitate better go-to-market, user acquisition, product distribution, hiring, and growth strategy for its portfolio startups.
“Being associated with the early-stage startups’ ecosystem for over a decade, we have realised that there is a strong need for an approachable institutional capital support for early-stage founders,” Rathi said. “Our vision is to fill this gap by being the most reliable, approachable, founder-centric, and smart institutional capital support from Day Zero.”
Rathi added that fundraising has always been a full-time activity for entrepreneurs.
“Hence, as partners with a skin-in-the-game approach, we want to ensure that founders stay focused towards building what they enjoy the most, while we take on the responsibility of enabling capital support required to build their venture,” he said.