Mela Ventures announces first close of maiden fund at $17.5 mn

Mela Ventures, set up by former Mindtree co-founders Krishnakumar Natarajan and NS Parthasarathy, has announced the first close of its maiden fund MV Core Tech Fund-I at Rs 130 crore ($17.5 million as per current exchange rates).

The fund, which looks to raise a total corpus of Rs 200 crore ($27 million), has made its first close within 12 weeks of receiving approval to launch from markets regulator Security and Exchanges Board of India (SEBI). 

Managing partner Parthasarathy said that Mindtree co-founders in India, excluding Happiest Minds founder Ashok Soota, committed a majority of the capital in this round, which also counts undisclosed IT and technology industry veterans as limited partners.

Read: Ashok Soota founded Happiest Minds gets SEBI nod for IPO

“Around 40% of the commitment for the fund is likely to come from the co-founders of Mindtree, rest will come from outside LPs,” Parthasarathy told TechCircle, adding that Mela Ventures has made a conscious decision to stay away from foreign capital, including commitment from Mindtree co-founders based in the US. 

The fund is also evaluating backing from fund of funds, Indian family office and other professionals for the final close.

With a focus on early stage investments in startups in the IT and B2B sectors, the fund has issued its first term sheet to a Bengaluru-based company in the augmented reality and virtual reality space serving the retail space.  

“Our definition of early stage is very clear -- it should be a startup which has a revenue between $250,000 and $500,000, and has more than one customer, beyond friends and family,” Parthasarathy said, adding that the fund will look at companies that can be scaled globally. 

The fund looks to invest upto $1 million in companies and is open to co-invest with early stage India funds. 

“We are not dogmatic about being lead investors and have had early discussions with some funds. However, if we think we can add more value to a company, we insist on taking the board seat,” he added.

Mela Ventures looks to deploy 40% of its corpus in the first round of investment and infuse the rest in follow-on rounds, Parthasarathy said. It aims to back 12-15 companies during the lifecycle of the first fund, he added. 

It has also tied up with corporate incubators such as Accenture Incubator and Microsoft Incubator to evaluate companies. It is currently evaluating more than one company a week, with a focus on Bengaluru, Hyderabad, Chennai and Pune, due to the current restrictions on travel, he said. 

Multiple early stage venture capital funds in India have raised dedicated funds for deployment this year. Endiya Partners has been in the process of raising Rs 500 crore ($66 million) Endiya Fund II.

Global early stage venture fund Lightspeed announced its $275 million third fund for India earlier this month, while Accel Partners announced a $550 million India specific fund in December 2019.