Arkam doubles down on expertise in ‘middle India’ with new fund

Arkam Ventures managing partners Bala Srinivasa (left) and Rahul Chandra / Photo credit: Arkam Ventures

India-based Arkam Ventures has announced the launch of Fund II, eyeing to raise US$180 million in total.

Arkam will select 20 startups for this new fund, with top-tier global institutional investors and family offices participating as limited partners, the company said.

The VC firm added that it will continue its support for its existing focus sectors like fintech, healthcare, and software as a service, while also scouting promising firms in electric vehicle and manufacturing tech sectors.

Arkam is also targeting the country’s growing digitalization trend, particularly among the middle-income segment, consisting of around 400 million individuals – which the company refers to as the “middle India.”

“We understand middle India better than any other funds in the country,” Rahul Chandra, managing partner at Arkam Ventures, told Tech in Asia.

According to Chandra, this consumer segment’s spending on essentials like food, transportation, and healthcare “is driving rapid and irreversible change,” and this spending trend has been “largely influenced by Covid-19.”

Some of Arkam’s portfolio startups include fintech firms like Jar and Kreditbee, and SaaS firms like SpotDraft and Signzy.

Additionally, Arkam is deploying funds from US$106 million Fund I, and has a couple more investments to make before concluding this phase. Chandra said these remaining investments should be completed by October this year, after which they will start investing from the new fund.

Arkam is aiming for a 4x to 5x return on Fund I. “About a third of our portfolio is less than a year old,” Chandra said.

Many of the firm’s portfolio companies have secured multiple rounds of funding from other investors, resulting in a total market cap of around US$2.5 billion, the company said. In the second half of 2022 alone, the VC firm’s portfolio raised around US$20 million in total.

“Our companies have an average cash runway of about 40 months, indicating they are well-funded,” said Chandra. “Additionally, there have been around 20 investors who have participated in successive rounds within our portfolio.”

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