Arkam Backs Founders Focused on Building Tech-led Solutions for the Next 400 Mn Indians The Bengaluru-based early-stage tech VC fund has launched its Fund II on Tuesday to go deeper in existing sectors across fintech, skilling, agri/food, mobility healthcare and SaaS startups.
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The Bengaluru-based Arkam Ventures announced the launch of its Fund II on Tuesday, with a target size of USD 180 million. The fund's goal is to build a thesis-driven, concentrated portfolio by digging deeper into its current sectors and identifying category leaders in emerging areas like manufacturing tech and EVs.
It will take 6-7 months to raise the required USD 180 million.
The focus
In order to provide tech-driven solutions for the next 400 million Indians, Arkam claims to support a new generation of founders. It normally writes a first cheque for between USD 1 million and USD 3 million and can later invest up to USD 8 million in a particular business. The firm does 60 to 80 deep dives on around 1,200 companies annually and invests in six to seven of them if they closely match their investment thesis.
Arkam will keep putting its emphasis on SaaS, financial services, skill development, food, agriculture, and healthcare.
The Middle India SaaS opportunity, as per Rahul Chandra, Managing Director of Arkam, will result in the formation of 100 new mega firms over the following ten years.
According to Bala Srinivasa, Managing Director of Arkam, "As we deepen our Middle India and SaaS playbooks, it gives us an edge in identifying amazing companies and new business models and being the VC of choice for the best founders targeting this opportunity."
20 tech businesses will be added to the portfolio of Arkam's Fund II. The LP base for Fund II will be made up of premier international family offices and institutional investors. British International Investment, SIDBI, Evolvence, Quilvest, US Institutional Investors, and sizable family offices are some of the current investors in the Arkam Fund I.
With Fund II, Arkam stated that it plans to invest additional money and support its strongest founders and businesses in follow-on rounds. The fund will also strengthen its portfolio advising function, which focuses on go-to-market strategy, organisational design, and finance and operations.
The current status
Arkam assessed Middle India potential in the financial services, skilling, food, agricultural, mobility, healthcare, and SaaS sectors from its USD 106 million Fund 1. 16 cutting-edge businesses make up its current portfolio, including financial firms like Jar and Kreditbee, food and agritech companies like Jai-Kisan and Jumbotail, staffing firms like Smartstaff and Cusmat, as well as SaaS companies like Spotdraft and Signzy.
The Arkam portfolio says it has expanded in size and scope over the last three years while proving its capacity to monetize. For instance, the loan portal Kreditbee is profitable on a monthly basis. Initially processing 100,000 loans per month, it now processes more than 1 million loans each month. Similarily, in the previous two years, the user base of Jar's digital gold savings app increased by 35 times. Since Arkam's investment, Spotdraft, a platform for contract automation and management software, has seen an over 8x increase in revenue from clients including AirBnB, Notion, Snowflake, OnDeck, and ChargeBee. According to the firm, the total market value of the Arkam portfolio surpasses USD 2.5 billion.
Chandra claimed that Arkam's "foundation first" strategy aids portfolio companies in building sustainable businesses with the appropriate organisational structure, governance, and marketing plans. "Six of Arkam's Fund I investments have already established themselves as market leaders. With a tech-based business strategy, they are rapidly scaling to service hundreds of millions of clients while redefining markets," he highlighted.
"By lowering adoption barriers, fostering trust, and developing high-frequency and low-ticket business models that scale well, portfolio businesses like KreditBee, Smallcase, and Jar have developed successful digital products for Middle India. Our SaaS businesses, like Spotdraft and Signzy, have effectively tapped international markets with India-made innovations. Our idea, which is still in its early phases, feels like a multigenerational potential," said Srinivasa.
Before Arkam Ventures, Rahul was the Co-founder and Managing Director at Helion Venture Partners and Bala was a partner at Kalaari Capital.
Last week, Blume Ventures also announced the first close of its new opportunity fund cum continuity fund, Fund 1Y at INR 200 crore (USD 25 million) of the INR 400 crore (USD 50 million) target to acquire strong winners from its Fund I and related investment vehicles, and use the remaining money to invest in the current winners of their other funds.
