Funder’s Forum, a startup funding trust and advocacy platform has been set-up by a group of Indian early to mid stage domestic venture capital firms (VCs), reported ET. The group comprises of prominent names such as Chiratae Ventures, Kae Capital, YourNest Venture Capital and Stellaris Venture Partners, among others. Reportedly, these VCs together manage a pool of more than $800 million in assets.
The idea behind the Funder’s Forum is to create a common pool of resources, have common deal flow. This wil enable bigger writer size cheques to the companies and lead a funding round collectively. Also, the Funder’s Forum will work similarly to existing angel networks such as Indian Angel Network.
According to the Indian Tech Startup Funding Report 2018, the year 2018 observed a significant drop of 40 per cent in comparison to 2017 in funding deals in the early stage.
From 551 in 2017, the number of deals in the early stage came down to 331 in 2018.
“India has only two or three domestic institutional LPs, unlike in the west…One of the biggest needs for domestic funds is capital. That becomes paramount. This is an advocacy platform for domestic funds,” Rahul Chowdhri of Stellaris Venture Partners, said.
Besides, the group of VCs, which competes with foreign investors like Sequoia Capital, Accel Partners among others in India’s fast-growing startup ecosystem, will also be engaging with policymakers, such as the Reserve Bank of India and the Securities and Exchange Board of India.
However, at present, the venture capital and private equity industry follow the 2:20 fund structure. Two and twenty (or “2 and 20”) is a fee arrangement that is standard in the hedge fund industry and is also common in venture capital and private equity.
Here “Two” means 2 percent of assets under management (AUM), and refers to the annual management fee charged by the hedge fund for managing assets. Twenty” refers to the standard performance or incentive fee of 20 per cent of profits made by the fund above a certain predefined benchmark.
Further, with India now embracing more than 49,000 startups, the Silicon Valley investors are becoming more prominent in the Indian startup ecosystem.
While, recently, YCombinator picked record 15 startups from India, which is a large number considering the previous three to four startups selected earlier for its programme from the country.