Axilor Ventures, a seed fund founded by tech veterans including Infosys co-founders Kris Gopalakrishnan and SD Shibulal, has launched a second fund with a target corpus of $100 million. The target of the fund is almost four times larger than the first fund's size.
Axilor Technology Fund II has a 15 year tenure unlike the typical 10 year VC fund lifecycles, which allows the investor to stay with its portfolio companies much longer. The longer tenure is possible because it is a proprietary fund with a majority of the target corpus coming from the family houses of SD Shibulal and Kris Gopalakrishnan, and the remaining amount is pooled in by other three founders Tarun Khanna, Srinath Batni and Ganapathy Venugopal.
The proprietary fund gives us a lot of flexibility to recycle, redeploy and time our exits, and focus more on what we do best, which is working with start-up founders. It is very important to take a longer term view because it is hard to time market cycles like what we saw in 2017 and what we are seeing now. We play in the early stages, which means that the uncertainty is very high. A longer tenure allows us to take a medium to longer-term view. Ganapathy Venugopal, Co-founder and CEO of Axilor, said it is important to be on the right side of the cycle because it gives flexibility in how we manage our investment cycles as well as exit cycles and is important for us to be on the right side of the cycle.
Venugopal said the fund will set aside 30 per cent of the new corpus for investing in 10 -- 12 to perform from its first fund.
The fund expects to back about 100 125 start-ups over the next 10 -- 12 years, with an average cheque size of $750,000 to $1 million.
The fund, Axilor Technology Fund-I, was founded in 2018, and has invested in 54 startups. The company said in a statement that it has an industry-leading follow-on rate of over 75 per cent, with 21 of its portfolio start-ups already crossing Series A and beyond. Its portfolio includes Detect, Enkash, Headfone, Locofast, Loco, Medfin, Niramai, Urban Piper, Vyapar and Wiz.
Our focus as a seed fund and our promise to early-stage founders has always been that we will work with them closely with a deep engagement model to help them improve their chances of getting to Series A. We expect the number of Series A companies to grow to 32 within the four years of our active deployment, which should take us to a Series A conversion rate of almost 3 -- 3.5 x of system average, according to Venugopal.
He said that the fund sets aside an amount for potential bridge rounds for each of its investee firms to help them get to the Series A stage.
When founders are building companies, they want to be not under pressure for their next fundraise because of the market conditions. He said that we are consciously setting aside almost 250,000 as a potential bridge for every cheque that we write so that we can give that amount of freedom and flexibility to founders to time their next fundraise.