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Golden Sparrow, a US-domiciled micro venture capital firm, has launched a separate fund to invest in AI and software-as-a-service (SaaS) startups in India.

Led by Rishaad Currimjee as General Partner, Golden Sparrow has raised $6 million in the first close of the fund, with the final size expected to be $8 million. Michael Marmor and Anand Rao are partners in the fund as well.

Earlier this month, Golden Sparrow made its first investment in Sentra.world, infusing $200,000 in the SaaS startup focused on the ESG segment. Also, Currimjee has personally invested in 12 AI and SaaS startups.

“India will be the birthplace of category-defining companies in AI and SaaS, which are the primary focus areas of our fund,” Currimjee said.

Golden Sparrow is expected to make the final close of the India-dedicated fund by the third quarter of 2023. The limited partners for the fund include senior executives from technology firms, founders, and family offices. The VC firm noted that over 20% of the LP in the fund are women.

In the present funding environment, the highest activity has been in the early-stage category, especially at the seed, pre-Series A and Series A stages.

In terms of sector investment, SaaS has generated considerable interest among investors. A report by venture capital fund Chiratae Ventures and strategy consulting firm Zinnov stated that the Indian SaaS industry is set to reach $26 billion in terms of revenue by 2026.