Fundamentum, a prominent India-focused growth-stage investor, has announced the launch of its third fund, aiming to raise Rs 2,200 crore, including a Rs 400 crore greenshoe option. Despite the increasing attention on India's deep tech sector, Sanjeev Aggarwal, Co-founder and General Partner at Fundamentum, stated the firm remains unconvinced that deep tech startups are consistently ready for Series B investments.
Deep Tech Investment: A Measured Approach
Aggarwal highlighted the challenge in evaluating the underlying technology of deep tech ventures at a Series B stage. "We are still not clear whether the Series B moment for deep tech has arrived or not," he told Business Today. Unlike AI, which is often embedded within existing business models, deep tech presents a distinct evaluation hurdle for growth-stage investors.
Fundamentum plans to rely heavily on robust customer adoption as the primary validation for deep tech solutions. If a technology demonstrates strong enterprise or commercial traction, the firm believes it can add significant value by leveraging its operational expertise and network to accelerate market entry and global expansion.
AI: The Clear Investment Priority
In stark contrast to its cautious stance on deep tech investment, Fundamentum expresses strong conviction in Artificial Intelligence (AI). The firm views AI not as a standalone category but as a pervasive horizontal capability transforming diverse industries like financial services, education, and commerce.
Prateek Jain, General Partner at Fundamentum, emphasized how AI is fundamentally altering the economic landscape. He noted that the "cost of intelligence has shrunk to near zero," making sophisticated services economically viable for millions of consumers previously underserved. Aggarwal anticipates AI will dramatically expand access to digital services for India's approximately 400 million mobile internet users, enabling personalized wealth management, insurance advisory, and tutoring beyond affluent urban populations.
Mayank Kacchwaha, another General Partner, added that AI-driven conversational interfaces and agentic commerce could further extend digital and financial services to an additional 100 million users, particularly those who prefer voice interactions over text.
Nandan Nilekani's Role and Fund Strategy
The third fund marks a significant commitment from Infosys co-founder Nandan Nilekani, who is anchoring the fund. Aggarwal underscored Nilekani's role beyond capital, citing him as a crucial source of proprietary deal flow and a mentor who provides regular feedback to portfolio founders and on prospective investments.
Founded in 2017, Fundamentum's first $90-million fund backed companies like Spinny and PharmEasy. Its second $200-million fund, raised in 2022, invested in 11 startups, including Kuku FM and Stable Money. With Fund III, the firm intends to maintain a concentrated portfolio of around 10 companies, while reserving capital to support its strongest performers.
The firm believes AI will drive the next phase of growth investing. However, deep tech will need to consistently demonstrate successful commercial adoption to become a core Series B investment focus for Fundamentum.