This CEO’s new VC fund will invest in startups from Tamil Nadu

There’s a new venture capitalist on the block. Suresh Sambandam, CEO of Chennai-based SaaS company Kissflow, has launched his VC fund. He says Mudhal VC will focus on supporting early stage and growth stage startups in Tamil Nadu. The fund already has 15 companies in its portfolio and hopes to address a very specific funding gap that exists for early-stage startups.

“People are not ready to finance early-stage companies and there is a high infant mortality rate at this stage,” says Suresh, who is also a general partner at Mudhal VC. “I wanted to solve this problem.”

CNBC-TV18 learns that Mudhal VC will adopt a model inspired by US tech accelerator and VC fund Y-combinator, focusing on mentoring, fellowships, coaching and financing – in that order. Mudhal VC’s fund size is Rs 125 crore, and portfolio companies such as photo-sharing app Social Gallery, early-stage startup QSR Mushroom Mama and concept-stage EV startup Bad Boy – co-founded by Suresh himself – are in the mix .

So far, Mudhal VC has a network of 1,000 founders and has started mentoring 75 startups. Of these, 15 start-ups were qualified for financing. One fifth of the fund’s total capital will be invested exclusively by the founder’s family in early-stage companies. “We will invest Rs 25 crore in very early stage companies,” says Suresh. “This money will come from family sources, because many people do not want to bet on this business (start-ups at an early stage of development).

Interestingly, one of the prerequisites for investing in an early-stage startup backed by Mudhal VC is that investors must agree to waive the pre-determined exit timeline, which will provide these startups with the necessary time and runway to grow.

The remaining Rs 100 crore of capital from Mudhal VC will be allocated to growth-stage startups, with potential limited partner (LP) participation over the next three years.

While the fund says it is yet to finalize talks with potential investors, Mudhal VC has names in mind such as Kalaari Capital’s Vani Kola and Freshworks CEO Girish Mathrubootham. Suresh said his average stake in the companies he finances is between 5% and 20% and average investments per company range from Rs 25 lakh to Rs 5 crore, depending on the stage of its journey.

“I focus on how many companies I can put into the accelerator,” he adds. “Today we are graduating 15 companies; Can I close 50 companies in two years? Can I close 500 companies in 5 years? If I manage to do that, that’s a real yardstick that I have to take to heart.”

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