April 3, 2018

Bengaluru and Seattle-based Unitus Seed Fund has raised $13 million toward a total expected corpus of $46 million for its second India-focused venture capital fund, according to a filing with the Securities and Exchange Commission (SEC).

Led by partners Dave Richards, Will Poole, Srikrishna Ramamoorthy, Ravi Venkatensan, and Srikanth Iyer, Unitus’(now fully committed) first $23 million fund was launched in 2012. It was backed by a field of international investors including TV Mohandas Pai, Dr. Ranjan Pai, Vinod Khosla, Bill Gates, Steve Singh, Desh Deshpande, Romesh Wadhwani, Michael Dell, Hemendra Kothari among others, according to  Tech Portal. The majority of the investors backing Unitus’ first fund also are backing the second fund, which is targeting investments in agriculture, education, fintech, and healthcare, mobile, and e-commerce.

With its first fund fully committed at 23 investments, Unitus’ second fund has already made investments in six startups, under a “warehousing” structure, according to Deal Street Asia. Under such a framework, warehousing allows venture capital commitments by a firm without capital on hand due to raising a new fund.

Exceeding its first fund, Unitus’ second fund is targeting between 25 and 30 investments with each investment coming in at approximately $450,000 compared to the first fund which kept its investment size between $150,000 and $300,000.

Eye on India

The country’s vast and growing population, combined with increasing affluence and socio-economic shifts, are expected to see the country’s overall food consumption increase by 4 percent per year to 2030, while per capita food consumption is expected to increase by 3 percent per year. Consumption in rural areas is expected to climb by 2.5 percent, while food consumption in urban areas will see double this growth at 5 percent.

Additionally, India is home to the second largest agricultural land bank in the world with 157.35 hectares, and combined, agriculture, fisheries, and forestry represent one of the largest factors of India’s gross domestic product (GDP) at $244.74 billion for fiscal year 2016.

Based on these projections, and the expected growth in the country’s agricultural production, processing, and exporting activities, McKinsey & Company foresees India’s agricultural industry growing at a rate of between 5.2 and 5.7 percent over the next two decades.

India is indeed maturing as both a destination for investment capital and as an investor. In July 2016 Kohlberg Kravis Roberts & Co. (KKR) invested $77.4 million in Kwality Ltd. – India’s largest private dairy company – through a structured finance deal.

In September of that same year, Denmark-based Sophia Investment ApS led a $2 million Series A for CropIn Technology – Bangalore, India-based farm management software company.

Hong Kong-based Epsilon Venture Partners, and Tara Indian Fund IV led an $8 million Series A for Indian fresh produce supply chain management and business-to-business (B2B) agtech platform Farm Taaza Produce Pvt in October 2017; and in March of this year Exfinity Venture Partners, a “frontier technology fund backing enterprise companies in India and across the India-U.S. business corridor” made a $2 million seed round investment in California-based AgShift.

India’s growing stature as a serious investment partner, however, was reinforced in July of last year when during a visit to Israel by Indian Prime Minister Narendra Modi, the two countries announced the launch of the Israel India Innovation Initiative Fund (I4F) – an investment vehicle designed to focus on mutually beneficial investments in sectors ranging from agriculture to water to space.

Under the terms of the fund, each country has agreed to commit $4 million per year for five years, for a total corpus of $40 million. Overall, seven MOUs were signed by the two countries, which upon observation, are likely strategic collaborators. Modi is actively seeking technologies that can foster India’s push toward modernization and facilitate its reach into global markets, while Israel could greatly benefit from deeper access to India’s massive market of 1.3 billion people for its tech exports.

-Lynda Kiernan