Karnataka's state

Karnataka's state-backed venture funds invest Rs 171 crore in 59 startups

Karnataka’s government-backed Venture Capital Funds have invested Rs 171 crore in 59 companies through six funds since 1999, supporting startups across sectors including information technology, semiconductors, biotechnology, artificial intelligence, deeptech and animation, visual effects, gaming and comics (AVGC).

Of the 59 investments made so far, the funds have exited 34 investments, generating cumulative realisations of Rs 129 crore, according to data sourced by Moneycontrol from Karnataka’s Department of Electronics, IT, BT and Science & Technology.

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The funds operate under Karnataka Information Technology Venture Capital Fund (KITVEN) framework, which has evolved over the years to support emerging technology and deeptech sectors.

The state is now looking to expand its startup funding support through a proposed Rs 200-crore Fund of Funds, while also evaluating a co-investment model to back startups that have already attracted private investors.

Also, read: LEAP, Karnataka’s Rs 1,000 crore startup push to take growth beyond Bengaluru: Priyank Kharge

N Manjula, secretary, Karnataka Department of Electronics, IT, BT and Science & Technology, told Moneycontrol that the government’s approach is to support startups, particularly as they enter the growth stage. "We are supporting our startups through investments, particularly when they are at the growth stage. We have KITVEN Fund, Karnataka’s IT department venture capital fund, which now has about Rs 100 crore allocated for this year. KITVEN Fund is looking at relevant technologies and investing in startups across these areas,” Manjula said.

The state has also launched Beyond Bengaluru Cluster Seed Fund for Startups, with a target corpus of Rs 75 crore exclusively for startups based outside Bengaluru. The fund is planned to cover three clusters - Mysuru, Mangaluru and Hubballi-Dharwad-Belagavi. Karnataka Asset Management Company Pvt Ltd (KAMCO) acts as the investment manager for the funds floated by Karnataka government.

Also, read: Karnataka to launch deep tech push with Rs 663 crore fund; VCs to bring in Rs 443 crore

"An investment committee chaired by the managing director of KITS and comprising industry professionals and investors oversees investment and divestment decisions," Manjula said.

On the proposed Fund of Funds, Manjula said government would soon release the guidelines and is primarily examining a co-investment model. "We are primarily looking at a co-investment model, where we can support startups that have already undergone due diligence and received investment from other investors. This can help reduce the risk for investors," she said.

Six funds, Rs 225 crore committed

Karnataka has launched six venture funds under KITVEN framework, with a combined corpus/commitment of about Rs 225 crore, according to the data. Of the 59 investments made by these funds, 34 have been exited, generating Rs 129 crore in cumulative realisations.

Also, read: Quitting your job to pursue entrepreneurship? Karnataka to offer Rs 25K a month, says Priyank Kharge

The funds that are now investing include KITVEN 4 AVGC and KITVEN Fund 5. KITVEN 4 AVGC typically invests between Rs 1.5 crore and Rs 2 crore per company. KITVEN Fund 5 has a target corpus of Rs 100 crore and committed capital of Rs 35 crore. Investments from the fund typically range between Rs 2 crore and Rs 3 crore per company.

Some of the key companies backed by KITVEN funds include Graphene Semiconductor, RelQ Software, Indegene Lifesystems, Pinaka Aerospace, Remedio Innovations, Bellatrix Aerospace, QNu Labs, Aarav Unmanned Systems, Pandorum Technologies, Fibroheal Woundcare, PlayShifu, Metashot, HRS Navigation, Dave AI and String Bio.

Also, read: Karnataka approves innovation, biotech and industry-academia projects worth Rs 27 crore

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