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Seed funds for startups: gradCapital, a pan-India student-driven institution that invests in student startups and ventures, on Friday announced the launch of its second fund, sized about $6M to invest in student startups. According to the release, the fund provides a $40,000 investment for 4% equity and provides the chosen entrepreneurial students with a 4-week cohort in Bengaluru, where they get an opportunity to meet self-made entrepreneurs such as Tarun Mehta (Co-founder, Ather Energy), Shashank (Co-founder, Razorpay), Kailash Nadh (CTO, Zerodha), and many others.
As per the release, gradCapital is backed by key investors such as CIIE, IIM-Ahmedabad, Alagu Preiyannan, Ankur Warikoo, and Kanwal Rekhi. About 30 per cent of the companies post the cohort have raised an average follow-on of $600k. The follow-on investors include Lightspeed and Rainmatter Capital. About 3000 applications are received for the fund yearly, of which only 20 get the funding.
Abhishek, Co-founder & CEO, said, “We are not in the business of finding and investing in deals, we are in the business of letting students be more ambitious and build a future despite having a challenging education system. Being a student also
has an unfair advantage: building with friends, not being scared of thinking big, and being scrappy/fast with their project. How many experienced people can do that? It’s a systemic failure when ambitious students aren’t able to take off while in college, and they end up taking a job because of a loan and become too rational. After which, they are more likely to start a D2C company instead of a quantum computer, and we need more of the latter.”
The fund was established by BITS
As per the report, in 2021, gradCapital started off with a cohort of 5 teams to help them get into Y Combinator (YC), of which one was Zepto. Later, gradCapital raised a $1M fund to deploy into 18 companies. The fund is now running at 2x its initial value within 18 months.
Also read: Startup funding declined by 72% in H1 2023 reflecting global trend: Tracxn report
Indian startups may heave a sigh of relief soon as investors expect the funding spring to return over the next six to 12 months after a prolonged funding winter. Consultancy firm RedSeer, citing a survey of 21 investors in June this year, said that 50 per cent of respondents expect 6-12 months to fund spring while 22 per cent expect 12-18 months and another 11 per cent said it might take more than 18 months.
Also read: Funding winter: Investors expect ‘spring’ to return in 6-12 months for startups, says report
The survey report noted that startup funding in value and volume in 2023 is expected to revert to the long-term trend line. In other words, the value and volume may recover back to pre-2021 levels. $12-15 billion across 700-900 funding deals is expected in 2023, in line with around $12 billion invested in 2018, 2019 and 2020 across 833, 810 and 953 deals before it peaked at $42 billion across 1,584 deals in 2021 and $25 billion in 1,519 deals in 2022. In 2024, the funding is likely to recover to $15-20 billion in 1,000-1,200 deals.
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