Nexus Venture eyes $700 mln fund to bet on India, U.S. tech startups-sources

PubMatic

04/01/2023 08:22

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      Nexus will manage over $2 bln in assets after new fund
    

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      Its existing bets include India's Delhivery, U.S.-based
Postman
    

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      New fund raise talks come after India funding slowdown in
2022 
    

  
    By M. Sriram
       MUMBAI, Jan 4 (Reuters) - India's Nexus Venture Partners
is in advanced talks to raise a $700 million fund, the
second-biggest such pool to be garnered in the country in the
past year, to invest in domestic and U.S.-based technology
firms, two sources with direct knowledge said.
    The planned fund raising, which one of the sources said will
close within two months, is an indication that investors may be
starting to get more comfortable with Indian technology company
valuations after the poor market performance in 2022 of some
high-flying startups and amid a global tech sector rout.
    It would also expand the pool of funds available to
startups, at a time when fundraising by Indian startups fell by
a third last year to $24 billion, Venture Intelligence data
showed.
    Founded in 2006, Nexus was one of the first Indian venture
capital firms to invest in U.S. and India-based software
startups. The new fund will be its seventh so far and take the
firm's assets under management to more than $2 billion.
    Some of Nexus' existing investors include global pension
funds, billionaire family offices and endowment funds. The new
fund has received a strong response from endowments, one of the
sources said, without sharing names of any specific investors.
    Nexus will invest the new funds - which will be the biggest
raised in India after Sequoia's $2.85 billion fund in mid-2022 -
in early stage funding rounds of Indian internet and technology
startups, as well as U.S.-based software firms, the sources
said. 
    Nexus believes investing in U.S. software firms will help it
hedge its bets and provide more stability than high-profile
Indian startups which often burn billions of dollars in growth
phase to achieve fast growth and attract users, they added.
    And Nexus is betting that India - where internet and mobile
phone usage is rising rapidly - will remain a long-term,
attractive bet for investors of its new fund, one of the sources
said.
    Mumbai-based Nexus did not respond to a request for comment.
The sources declined to be named as the discussions are private.
   
    Investors have turned cautious about lofty valuations amid a
global tech rout - India's digital services companies Paytm
 PAYT.NS  and Zomato  ZOMT.NS  have plunged after making their
market debuts in 2021.
    Nexus' current bets include Indian logistics firm Delhivery
 DELH.NS , online education firm Unacademy and U.S.-based
software companies PubMatic Inc  PUBM.O  and Postman, all of
which clocked multi-billion-dollar valuations in recent years.
    Nexus was co-founded by Naren Gupta who ran a software
company in the United States for 15 years before selling it to
Intel. Gupta, one of India's most renowned venture capitalists,
died in 2021. 
    Another co-founder, Sandeep Singhal, left the firm in 2021,
while the third co-founder, former eBay India and PayPal
executive Suvir Sujan, is one of the current managing directors.
 (Reporting by M. Sriram; Editing by Aditya Kalra and
Muralikumar Anantharaman)
 ((Sriram.Mani@thomsonreuters.com; Twitter: @followthemani))