The fund will invest in up to 20 startups over the next three to four years
Merak will invest $750K to $1 Mn at the seed stage, which can be followed by follow-on investments
Merak Ventures plans to announce the first close of the fund by the end of 2022
Mumbai-based early-stage venture capital (VC) firm Merak Ventures is raising its debut VC fund with a target corpus of $100 Mn. The fund will invest in up to 20 startups over the next three to four years.
“There are passionate founders who want to solve real-world problems and we want to empower them, not just with capital but as a mentor-partner. At Merak, we firmly believe businesses who solve authentic problems will always make for a sound investment,” Merak Ventures partner Manu Rikhye told Inc42.
Founded by Rikhye and Sheetal Bahl, Merak will back early-stage B2B startups, investing in seed rounds. Before founding Merak Ventures, Rikhye and Bahl were managing growx Ventures Fund I, which they continue to manage.
Speaking on the focus sectors for Merak, Rikhye said, “While the fund will remain sector-agnostic, some investment themes it will proactively chase include climate tech (encompassing agritech, mobility, carbon, climate finance, and digital solutions), insurtech, and Enterprise SaaS.”
“We will be investing between $750K and $1Mn in seed stage opportunities with significant capacity to do follow-on investments,” the cofounder of Merak Ventures added.
Merak will mark the first close of the fund by the end of this calendar year, according to Rikhye. “We are hoping to raise one-fourth to one-third of the corpus for the first close,” he added.
“Given the strong performance of our earlier fund, we have received encouraging feedback and interest from our existing investors. We expect them to lead (or anchor) the first close followed by participation from global and domestic investors,” Rikhye said when asked about investors in the fund.
According to Rikhye, the current startup environment in the country is encouraging for early-stage startups. Startup founders would seek capital from friends and family earlier, but now they have access to early-stage funds, including large institutional investors, who are willing to back the right idea and team, he said.
“A capable team looking to solve real-world problems now has access to sound financial acumen and resources which is beneficial for the entire ecosystem,” the Merak cofounder said.
It is prudent to mention here that while the startup ecosystem is witnessing an overall funding slowdown, early-stage startup funding has suffered the least, while late-stage funding has been decimated.
In July 2022, Indian startup funding was lower 90% year-on-year (YoY). Indian startups managed to raise only about $1.16 Bn in July, making it the worst month on record since January 2021. However, while late-stage funding and growth-stage funding fell 97% YoY and 60% YoY, respectively, early-stage funding rose 13% YoY.
