StartupXSeed Ventures looks to invest in AI, AR firms

It will focus on building products and situations for business customers

Bengaluru-based deep technology focused venture firm StartupXseed Ventures LLP is looking to invest in emerging  firms in artificial intelligence (AI) and augmented reality (AR), focused on building products and solutions for business customers.

The Rs 100-crore Securities and Exchange Board of India (Sebi)-registered fund, founded by technology industry leaders of Bengaluru — T V Mohandas Pai and V Balakrishnan, former directors at Infosys, B V Naidu, former director of Software Technology Parks of India (STPI) — looks out for entrepreneurs who have deep technology-focused skills, but need support infrastructure to scale and grow business.

"We will provide support, other than money till they cross the bridge. Take us as an accelerator programme that we have institutionalised everything under the fund," said B V Naidu, Managing Partner of StartupXseed Ventures. "Only a few academic accelerators have succeeded, while at the corporate accelerators, you will have a nice environment to create a brand for themselves — none of those executives are passionate enough to support an entrepreneur". The firm has so far invested in five firms — Aarav Unmanned Systems and Airwood Aerostructures, drone start-ups; ShieldSquare, a security start-up; Siliconch Systems that has developed IP in semiconductor space and Darwinbox HR Technology. "Each of these companies have gone for an up round with multiples of 2.5 to 10 times," says Naidu, who helped build the STPI in Bengaluru by offering common data services, shared infrastructure and local support, when the software services sector was blooming in the city. "In a few companies, we have also participated in the next round."

Increasingly, investors are focusing on backing start-ups that build products and services for business customers, hoping that a small investment, backed with relationships, can get long-term contracts with corporates. This would also help start-ups sustain financially and grow the business, unlike in the consumer space, where start-ups need to throw money to attract users.

The fund, he said, has backing from professionals from the information technology sector with deep domain expertise like Sanjay Nayak, the chief executive officer of Tejas Networks, to help telecommunication firms, or S Janakiraman, co-founder of MindTree to share his expertise in embedded systems.

"Most of our mentors are also investors in the fund. There is a tight coupling so that they show extra interest in the success of the start-up. It is not just money alone," says Naidu.

The firm also has set up a team that supports in accounts, infrastructure and governance standards, which help the entrepreneurs to focus on building technology products and  services.

StartupXseed has also tied up with the International Institute of Information Technology-Bangalore’s incubator and Blue Sky Angels, an initiative of eHealth Technology Business Incubator that has support from the department of science and technology.