Anthill Ventures, an early-stage investment firm and scaling platform for startups, is expecting the first close of its new early-stage technology fund with a co-investment pool aggregating to $100 million in April, a top executive of the venture capital firm told VCCircle.
The global fund is looking to raise $25 million from investors and another $75 million in the form of pledge capital for its limited partners, who will get an option to commit higher capital in portfolio companies, said Devang Mehta, partner, Anthill Ventures.
Pledge capital provides co-investment rights to LPs during a fundraising, and also works on launching an investment syndication platform for investors.
The fund will charge a management fee on the $25 million and allow LPs to triple their commitments directly into the deal flow. The LPs will be family offices and corporate venture funds from India and abroad and C-level executives from large corporations.
The fund is looking at a standard compensation carry rate of 20%. However, it will charge a premium fee of about 2.5% as its investors will have access to a new deal syndication platform, which it plans to launch by mid-2018, Mehta added.
In comparison, private equity fund typically follows the 2:20 fee structure – 2% as fund administration charges and 20% of carried interest or profits shared among the firm and its partners.
The cloud-based syndication platform will connect investors to potential investment opportunities.
“Once we start investing from the fund we will have to make 36 deals every year,” said Prasad Vanga, CEO and founder, Anthill Ventures, which is planning an interim close at $10 million in April, and expects the final close by the end of 2018.
Anthill will fully invest the fund in the first four years and start booking returns, thereafter, Vanga added.
The fund is targeting an internal rate of return of 35% and would look to exit opportunities from Series B onwards. The fund life will be about six years with an additional three-year extension. Through the syndication and accelerator platform, the fund expects its investments to mature faster, compared to other early-stage investments.
It would look for a pre-Series A commitment of $75,000, which can go up to $0.5 million for businesses that show high growth potential, Mehta added. Antill expects to invest larger sums of money at the Series A stage in about 20% of its portfolio companies.
The fund will have two vehicles – a SEBI-registered alternate investment fund (AIF) for raising capital from Indian investors and a Mauritius entity to reach investors outside India, particularly in the US, Singapore, Hong Kong and Europe.
It will focus on investment opportunities in artificial intelligence, virtual reality, augmented reality, machine learning and Internet of Things, across media and entertainment, health, urban infrastructure and finance companies. It plans to invest in companies based out of India, Singapore, Hong Kong, the Silicon Valley and Europe.
“Anthill Ventures is a genuine value-added source of capital. In addition to capital, we have a robust speed-scaling ecosystem that provides early-stage companies with mentorship, corporate connections, valuable strategy advice, as well as technology and infrastructure support, thus adding immense value and significantly improving the chances of success. Further, we help these companies attract future rounds of funding through a powerful cloud-based platform, thereby catalysing further growth,” said Mehta, who previously worked with Pravega Venture Partners.
Anthill has three businesses, which includes an investment firm, advisory business and an accelerator.
Besides providing capital, Anthill Ventures also acts as a speed scaling ecosystem that helps early-stage global startups at the pre-Series A levels to raise subsequent rounds within one or two years through its network of investors.
Anthill’s network of partners includes Nekko Capital, which is a 250-million euro entity that could potentially invest in the follow-on rounds of portfolio companies. Its other partners include Singapore-based fintech investment platform Fundnel, and US-based venture capital and investment management firm SOSV, which helps Anthill Ventures identify new investment opportunities.
Founded in 2014 Vanga, the former global head of change management and technology partnerships at Genpact, the startup incubator had initially raised a $2 million micro fund, through which it had built a portfolio around 22 companies across India, the US and Southeast Asia.
The fund is looking at an unrealised IRR of about 80% from the success of its portfolio companies. Some of the companies it has backed include 91 Springboard, Travelio, BuyTestSeries and Thrillophilia, Explara