The Indian deep-tech investment environment has reached a milestone with a Chennai-based venture capital company, Speciale Invest, officially claiming the development of its Growth Fund II. This impact fund of ₹1.400 crore is well-planned to offer adequate financial support to promising startups in the highly specialised deep-tech sector. Providing this large amount of capital, Speciale Invest will help fill an acute financing gap that is present in the domestic ecosystem, especially among those companies that have already overcome the initial obstacles of technological validation but have not yet developed a track record of reliable sources of revenue.
Among the key goals of ₹1,400 crore Growth Fund II is to invest in startups that are in a special transitional stage. A large number of India-based deep-tech startups end up at the stage of their core technology being well-developed and capable of being put into a real-world context, but fail to raise the capital to transform into commercially viable enterprises.
Speciale Invest understands this as a crucial point of juncture where numerous great innovations die because of failure to provide them with growth-stage support. Using this fund, the company plans to support approximately 12 to 15 startups and offer them average investment checks of between $5 million and $8 million. This capital injection is meant to enable these firms to move out of the lab or prototype phase to a level where they can compete favorably on a global level.
The industry target of the Growth Fund II is consistent with the long history of Speciale Invest, with its high-impact, science-driven industries. The venture capital company has reported that it will remain focused on spacetech, high-tech manufacturing, energy storage, and quantum computing investments. The fund will also target health and biosciences and defence technologies.
One of the areas of focus that this particular fund will look at is the heavy investment in unmanned systems and maritime surveillance. By targeting these two niches, Speciale Invest is assembling itself as a key upholder of sovereign technologies and highly scalable Indian-based intellectual property.
In order to lead such a growth-phase effort, Speciale Invest has strengthened its leadership team by incorporating Vijay Jacob as a general partner. Jacob, who brings experience of working with NewQuest Capital as a founding member, will lead the expansion stage investment strategy of the firm. Having leadership that investigates deep-tech firms that have reduced scientific risks and are prepared for capacity building is crucial. The company expects the change in the base of the Limited Partners in this fund.
The introduction of the ₹1,400 crore fund will be immediately after the successful close of fund III by the firm, which happened only three months ago. It has closed that fund at ₹600 crore, which is higher than its original target of ₹500 crore. Whereas Fund III was focused on funding 18 to 20 startups at the early-stage of ₹7 crore to ₹10 crore, the new Growth Fund II is a significant leap in scale and stage.
Speciale Invest has a track record of expanding its investment in its portfolio companies, since it transferred a 5% average stake in Fund I into Fund II, which was 10%, and hopes to have about 15% in Fund III. The company has also supported approximately 35 startups during this timeframe, with several of them emerging as big brands in their respective industries. It owns high-profile businesses like Agnikul Cosmos, GalaxEye, the ePlane Company, Ultraviolette, CynLr, and QNu Labs.
This is further demonstrated by the fact that the firm has already made nine M&A exits since the inception of the company. This track record of successful exits and portfolio growth provides the new growth fund a solid foundation on which to replicate this success on a larger scale.
The launch of the ₹1,400 crore growth fund II by Speciale Invest represents a turning point in the lives of deep-tech entrepreneurs in India. The fund offers a safety net and a readiness to compete in the global market by meeting the particular needs of companies that need to transition to commercial sustainability, rather than to technical readiness. Having a leadership team made up of industry veterans and the renewed focus on strategy specific to the industry, Speciale Invest is poised to lead the next wave of innovation in defence and spacetech and manufacturing.