Seedfund's three founders plan to go their own way

By Snigdha Sengupta & Madhav Chanchani
MUMBAI: Change is afoot at Seedfund, an early stage investment firm that is best known for recording one of the most profitable exits in India's nascent venture capital industry.

The three founding partners of the fund - Pravin Gandhi, Bharati Jacob and Mahesh Murthy - are going their own way. The firm, which is nearly a decade old, has shelved plans to raise a third fund, said two people aware of the developments.

Seedfund, which manages a combined corpus of about $70 million across two funds, the first of which was raised in 2006, earned windfall returns last year when online ticketing company redBus was acquired by South Africa's Naspers for about $100 million. “It is not unusual for teams to split in the venture capital industry . Personally , I plan to step down from an active investing role and have decided not to participate in yet another fund as a general partner,“ said Gandhi, the seniormost founding partner while confirming the development.

There have been other instances of partners choosing to go their own way in India's fast-growing venture industry. In April, Sandeep Murthy, general partner with Sherpalo Ventures, parted ways with the Silicon Valley firm to launch his own outfit, Lightbox Ventures.

Earlier, Silicon Valley serial entrepreneur Vinod Dham stepped down as founding partner at Bangalore-based IndoUS Venture Partners (IUVP), while Sequoia Capital ended its partnership with WestBridge Capital Partners.

Jacob, who is Seedfund's Bangalore-based partner, declined to discuss specifics only saying, “We are cur rently fully engaged with portfolio companies and investing from our current funds.“

As did Murthy, who works out of Mumbai. “We are committed to Seedfund II. There is nothing more to announce right now,“ he said. However, people with knowledge of the developments told ET that Jacob is likely to launch a new fund — with a corpus of about $60-70 million — that will focus on seed investments. Gandhi may be an advisor to the proposed fund, according to the sources.

Seedfund's investment team, including Sanjay Anandaram, Paula Mariwala and Shailesh Vickram Singh, are all expected to join Jacob's new fund.

“I may take a look at being an advisor in Bharati's fund. But right now, all three of us are committed to completing investments from Fund II. We will obviously continue to manage the portfolio till those investments are exited,“ said Gandhi.

Seedfund's second fund, launched in 2011, with a $54million corpus, has invested in 24 companies so far, including e-commerce startups Done By None and Voonik, events focused mobile app Nearify, and affordable dental care chain MyDentist. Gandhi said the fund will be fully utilised by December and it may add another 2-3 deals to the portfolio.