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Desi funders form collective to take on foreign investors

Funder’s Forum gets ready to compete with marquee Silicon Valley investors, while Pioneering Ventures’ new fund looks to reach a million farmers.

, ET Bureau|
Updated: Jun 10, 2019, 10.16 AM IST
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Besides ensuring a greater number of domestic institutions back home-grown funds, the Funder’s Forum will also look to engage on ensuring better tax treatments for the same.
NEW DELHI: A number of India’s top home-grown investment firms, which cumulatively manage close to $800 million in assets, have come together to form a collective to take on foreign investors as well as to act as an advocacy platform.

Funder’s Forum, which is being registered as a trust, has the likes of Chiratae Ventures, Kae Capital, YourNest Venture Capital and Stellaris Venture Partners, all leading early-to-mid-stage domestic venture capital firms as part of its founding advisory teams, and all of which compete with the likes of marquee Silicon Valley-based investors, such as Sequoia Capital and Accel Partners in India’s fastgrowing startup ecosystem.

“We felt that we should get a lot more support from the government, given that the domestic funds look at opportunities in India very differently, as opposed to the global funds,” Mahendra Swarup, founder of Venture Gurukool, and a founding member of Funder’s Forum, told ET. “Under the 2:20 fund structure, smaller funds aren’t a very viable proposition. The fee structure is so small that it is difficult to hire a good team. The disadvantage is that deal sourcing tends to suffer,” Swarup added.

The forming of Funder’s Forum follows that of IndiaTech, the advocacy platform founded by startup stalwarts Sachin Bansal, Ola founder Bhavish Aggarwal and Make-MyTrip Group CEO Deep Kalra, and which was formed to sole- ly promote the interests of domestic consumer internet giants over their global peers. The development also comes even as the likes of Y Combinator, the famous Valley-based incubator, which is behind the likes of Airbnb and Stripe, have been reported to have picked a record 15 startups for its summer batch of 2019, a massive jump from its previous record of selecting four-five startups fro Asia’s third-largest economy.

Separately, in January this year, Sequoia Capital launched its accelerator programme—Surge-—across India and in South East Asia, in the process, bringing on board former Google India head Rajan Anandan to lead the same. Members of Funder’s Forum will pool their resources, and have a common deal flow, thereby leading to larger cheques being written. The strategy mimics that of existing angel networks, such as Indian Angel Network, which work on a similar proposition. “This will allow the Funder’s Forum collective to lead a round, which they aren’t able to, in many cases, do today,” Swarup said.

The collective will also be engaging with policy makers, such as the Reserve Bank of India and the Securities and Exchange Board of India. “India has only two or three domestic institutional LPs, unlike in the west…One of the biggest needs for domestic funds is capital. That becomes paramount. This is an advocacy platform for domestic funds,” Rahul Chowdhri of Stellaris Venture Partners, said.

Besides ensuring a greater number of domestic institutions back home-grown funds, the Funder’s Forum will also look to engage on ensuring better tax treatments for the same. Also on the cards is ensuring that the current restriction of 35% of a total corpus coming from government organisations be relaxed. “It’s still early days. Some conversations have started… The idea is to bring it to the attention of policy makers as we move forward,” Chowdhri said.
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