Building on the success and learnings of its first Fund, Arkam Ventures, one of India’s leading early-stage tech VCs, launches its Fund II with a target size of USD 180 million. With Fund II, Arkam will continue to build a thesis-driven, concentrated portfolio by going deeper in its existing sectors and, as well as identifying category leaders in promising areas like Manufacturing Tech and EVs. Within Middle India Digitisation, Arkam will continue to focus on financial services, skilling, food, agriculture, healthcare, mobility, and SaaS.
Arkam’s Fund II will build a portfolio of 20 tech startups. Top-tier Global institutional investors and family offices will form the LP base for Fund II. Current Arkam Fund I investors include British International Investment, SIDBI, Evolvence, Quilvest, US Institutional Investors, and large family offices.
Started in 2020 by two seasoned venture capitalists, Rahul Chandra and Bala Srinivasa, Arkam is a pioneer in investing in the massive Middle India opportunity. Unlike its predecessors and peers who have largely backed start-ups serving the top of the pyramid, Arkam backs a new generation of founders focused on building tech-led solutions for the next 400 million Indians. Driven by India’s digital rails (UPI, eKYC, Aadhar) and massive digital adoption during the Covid-19 pandemic, these Middle India start-ups sense a generational opportunity to reimagine how essential products and services are delivered better, wider and cheaper using digital platforms.
From its USD 106 million Fund 1, Arkam evaluated Middle India opportunities across financial services, skilling, food, agriculture, mobility, healthcare and SaaS. Its portfolio currently consists of 16 new-age companies, including fintech firms such as Jar, and Kreditbee, Food/Agritech companies like Jai-Kisan and Jumbotail, Skilling companies like Smartstaff and Cusmat as well as SaaS companies like Spotdraft and Signzy.
According to Rahul Chandra, Managing Director, Arkam, “As a team with 20 years of venture investing experience in India, we believe that the defining themes for the next decade will be the untapped Middle India market, rapid scale, and capital efficiency. Arkam’s “foundation first” approach helps portfolio companies create sustainable businesses with the right governance, organizational design and go-to-market strategies. Six of Arkam’s Fund I investments are already leaders in their respective categories. They are redesigning markets with a tech-based business model and scaling rapidly to serve hundreds of millions of customers. We believe the Middle India digitisation and SaaS opportunity will lead to the creation of 100 new mega businesses over the next decade. Arkam II will participate in this exciting phase of value creation by leveraging its network of high-quality institutional LPs, seasoned investment team and access to highly driven founders.”
Sharing the learnings from Fund I, Bala Srinivasa, Managing Director, Arkam, says, “We launched Fund I with deep conviction on the Middle India digitisation and SaaS opportunity. Our LPs supported us, and it’s been gratifying to see the thesis play out both at the macro level and with Arkam investments. Portfolio companies like KreditBee, Smallcase, and Jar have created winning digital products for Middle India by reducing friction to adoption, building trust, and designing small-ticket and high-frequency business models that scale very efficiently. Our SaaS companies, like Spotdraft and Signzy, have successfully expanded their India product innovation to global markets. We feel our thesis is a multi-generational opportunity and is in its early stages. 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”.
Over the past 3 years, the Arkam portfolio has grown in size and scale while demonstrating the ability to monetize. For example, Kreditbee, India’s fastest-growing lending platform, is profitable on a monthly basis. It has grown from processing 100,000 loans at the time of initial investment to processing 1+ million loans a month today. Similarly, Jar’s digital gold savings app has grown its user base by 35x in the last two years. Spotdraft, the contract automation and management software platform, has grown over 8x in revenue since Arkam’s investment, with customers like AirBnB, Notion, Snowflake, OnDeck, and ChargeBee, among others. The aggregate market value of the Arkam portfolio exceeds USD 2.5B.
With Fund II, Arkam expects to deploy more capital and back its strongest founders and companies in follow-on rounds. The fund will also bolster its portfolio advisory function focused on organisational design, go-to-market (GTM) strategy, and finance & operations.