Seed-stage investor SRI Capital announces $100 mn US-India VC fund

Makes first close at $40 mn; firm is raising its maiden $100 mn early-stage VC fund focused on tech opportunities in US and India

Seed-stage investor SRI Capital has marked the first close of its debut venture capital fund at $40 million (Rs 2.74 billion) to invest in early-stage technology start-ups in India and the US, the firm’s founder and managing partner Sashi Reddi told VC Circle.

SRI Capital is raising its maiden $100 million early-stage VC fund focused on tech opportunities in the US and in India. Anchored by a $20 million commitment from the family office of Sashi Reddi, the fund is raising capital primarily from investors in the US and Europe.

"There is a funding gap for Indian start-ups targeting US enterprise customers. Indian VCs have struggled to support these US focused start-ups whereas US VCs typically do not understand India-based tech teams. This is the gap that SRI Capital will fill," Sashi Reddi, managing partner of SRI Capital said in a statement.

Besides Reddi, partners in the fund include Doc Parghi who is based in Philadelphia as well as two more advisory partners, yet to be announced, based in India. The team brings a mix of operating experience and investing experience and a long history of working together. The unique mix of two partners based in the US and two advisory partners based in India, brings a reach and skillset that is not available with most US and Indian VCs.

The fund will typically invest $1 million to $3 million in a start-up with the potential to invest in future rounds to support the growth of the company. It expects to do 6-8 investments per year.

SRI Capital has backed over 15 start-ups with this US-India model over the last 5 years. Some examples of this model are ThinCI and PhenomPeople. ThinCI is a chip company for autonomous driving that recently raised over $20 million from Japanese auto supplier 

Denso and a clutch of high profile industry veterans. PhenomPeople is a new age recruitment SaaS offering leveraging social media and machine learning that recently raised $22 million from a bunch of investors including Sierra Ventures and AXA Ventures. SRI Capital invested at the seed stage in both these companies.  

SRI Capital also backs start-ups founded by entrepreneurs who have studied and/or worked in the US and relocate to India to launch their startups. Some examples of successful investments with this US-India model are YuppTV, HealthifyMe, and FabHotels. YuppTV is a leading OTT player for Indian content that recently raised $50 million from Emerald Ventures, a media fund backed by KKR. HealthifyMe is a healthy lifestyle start-up that has raised nearly $20 million from IDG Ventures, Samsung NEXT, Sistema Asia Fund, Inventus Capital, Blume and others. FabHotels was founded by two Wharton MBAs who relocated to India to launch one of India's leading budget hotel brands, which recently raised $25 million from Goldman Sachs. SRI Capital was the first outside investor in all three companies.

"One of the first investors I approached when launching HealthifyMe was SRI Capital given their reputation as being entrepreneur friendly. They've stuck with us through some early difficult periods as we pivoted multiple times to find the right business model," said Tushar Vashist, founder/CEO of HealthifyMe.

So far the fund has done three investments: 

IndianMoney: A financial education company based in Bangalore that receives over 15,000 calls per day from people looking for advice on various financial products to invest in. Previously backed by Hyderabad Angels, SRI Capital has made a commitment to invest up to $3 milion in the company.

LetsMD: A Delhi-based start-up providing interest free loans to patients looking for medical treatments like IVF and weight loss that are not covered by insurance plans. Backing a second time entrepreneur, Wharton MBA with an initial investment of $500,000.

Sports Flashes: A Delhi-based startup creating the leading sports media brand in India, focusing on sports beyond cricket that are popular in India such as badminton, wrestling, and boxing. SRI Capital to invest up to $1 M. Previously backed by the Times Group.

SRI Capital is a US registered fund which launched its operations in January 2018.