Early-stage venture capital platform IIMA Ventures plans to double its pre-seed and seed investment cheques up to $500,000 compared with the usual amounts of $50,000 to $200,000, top officials at the firm said.
“Startups in the pre-seed and seed stage often require a continuum of capital ranging from $50,000 to $500,000 to truly unlock their potential,” Priyanka Chopra, chief executive and managing partner at IIMA Ventures, told Mint, explaining the firm’s rationale. “By expanding our investment capacity, we’re better positioned to meet founders where they are and fuel their growth from day zero.”
The firm will use its own funds and will also tie up with other organisations, as it has in the past.
“We are working with other organisations to create common pools of capital. It’s not necessary that everything will be done in the form of an alternative investment fund,” Chopra said.
The VC firm, set up at the Indian Institute of Management Ahmedabad as a Centre of Excellence with support from the Department of Science and Technology and the government of Gujarat, plans to make 40 to 50 investments this year, with a large weightage on the deep-tech sector. The remaining cheques will be written for startups in the climate tech and digital inclusion spaces.
The decision to increase cheque sizes for pre-seed startups comes in the backdrop of commerce minister Piyush Goyal’s remarks in New Delhi earlier this month when he said India needed more deep-tech innovations than quick-commerce solutions in order to stay competitive in the global market.
The early-stage firm had tied up with Small Industries Development Bank of India in 2023 to create a ₹40 crore fund to invest in deep-tech startups. The firm has written 10 cheques so far from that fund for companies including fabless semiconductor manufacturer Morphing Machines and Cancrie, a startup building nanocarbon for batteries from coconut shells.
“We are very hopeful that we will deploy their entire capital in the next 18-odd months,” said Chopra.
Evaluating deep-tech companies
IIMA Ventures’ deep-tech portfolio has eight to 10 space tech companies, including Agnikul and Bellatrix Aerospace. This year, the firm shifted focus to aerospace a little more deeply and invested in Nabhdrishti Aerospace, which builds gas turbines used in aviation and power generation.
The Ahmedabad-based firm said its moat lies in developing relationships with companies in the very early days, even before a product is realised.
“We build our relationship with them either through a studio mechanism or on a one-on-one basis with the founder. We make sure that we are on their minds before they start so then we become their first port of call,” said Vipul Patel, head of seed investing at IIMA Ventures.
Patel also sees manufacturing as a key interest area in deep tech.
“If you look at it as a horizontal, or even parts of it like space, robotics and even defence, and advanced material advancements we see that there is a large opportunity there,” he said.
In climate tech, the focus is on sustainability in industrial settings with decarbonisation as the larger theme. The firm has invested in EcoRatings and Free Spirits Green Labs and plans additional investments.
“Green material advancement is a category where we are expanding our portfolio,” Patel said.
Under digital inclusion investments for the year, IIMA Ventures is looking at startups that build targeted financial services products.
“One can create as many products as one wants, but if there is no trust, then adoption is going to be limited. Beyond a point, for product innovations to scale, there needs to be trust and stability. That’s why customer protection is so important to us,” said Chopra.
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