Aviral Bhatnagar has successfully closed his first INR 100 crore fund through A Junior VC (AJVC), targeting pre-seed investments in India’s growing startup ecosystem. This sector, which remains relatively untapped, is now getting much-needed support from Bhatnagar, who has extensive experience in early-stage investing. His firm aims to fund 12-15 startups annually across high-potential sectors like artificial intelligence (AI), SaaS (Software-as-a-Service), and consumer technology.
Previously a lead investor at Venture Highway, Bhatnagar exited before the firm’s acquisition by General Catalyst in June 2024. His new venture capital fund has exceeded its initial target and is considering utilizing a greenshoe option due to high investor interest. The fund is primarily backed by Indian family offices, high-net-worth individuals (HNIs), and business leaders, with 90% of the capital being domestic.
AJVC has already made nine investments in pre-seed startups, spanning AI, B2B businesses, direct-to-consumer brands, and consumer tech. Bhatnagar has set a standardized investment structure, offering INR 1.5 crore for a 9% stake in startups. With over 5,500 applications received, the firm is positioned as a critical player in bridging the funding gap for early-stage founders. The focus is on disciplined investments and long-term support, ensuring sustainable growth for the startups it backs.
1. AJVC: The New Face of Early-Stage Funding
1.1 Background and Vision
Aviral Bhatnagar, a seasoned investor, founded AJVC to solve a persistent problem in India’s startup ecosystem—access to capital at the pre-seed stage. Many promising startups struggle to raise even INR 1 crore, leading to missed opportunities and abandoned ventures. Recognizing this challenge, Bhatnagar created AJVC as a founder-friendly, fast, and approachable funding solution.
1.2 Business and Revenue Model
AJVC operates as a sector-agnostic micro-VC fund, focusing on pre-seed stage companies. The fund follows a structured investment model, providing INR 1.5 crore for a 9% equity stake. By maintaining a disciplined approach, AJVC ensures transparency and fairness in its funding decisions. The firm’s revenue model is based on long-term returns from equity appreciation as the startups scale and attract follow-on investments from larger VCs.
1.3 Funding Structure and Investors
The INR 100 crore fund has been oversubscribed, with significant interest from domestic investors. The limited partners (LPs) include Indian family offices, startup founders, HNIs, and executives from large conglomerates. With only 10% foreign investment, the fund emphasizes the growing confidence in India’s startup ecosystem. Given the overwhelming response, AJVC is considering raising an additional INR 50 crore through a greenshoe option.
2. The Market Gap and AJVC’s Role
2.1 The Untapped Pre-Seed Market
While India has seen significant growth in venture capital investments, the pre-seed stage remains underserved. Many startups find it challenging to secure initial funding, leading to a gap in the startup pipeline. AJVC aims to bridge this gap by providing early-stage startups with capital, mentorship, and strategic guidance.
2.2 Target Sectors for Investment
AJVC focuses on emerging sectors with high growth potential, including:
- Artificial Intelligence (AI): Five out of the nine investments made so far are in AI-driven startups. However, AJVC avoids investing in foundational AI models due to high capital requirements.
- SaaS (Software-as-a-Service): The fund is keen on startups developing innovative software solutions for businesses.
- Consumer Technology: Startups catering to evolving consumer demands in India’s digital economy.
- Deeptech and Space Tech: Emerging technologies like satellite-based solutions are also on AJVC’s radar.
3. Investment Strategy and Execution
3.1 Standardized Funding Approach
Bhatnagar has designed AJVC’s funding process to be transparent and efficient. The firm follows a standardized check size of INR 1.5 crore for a 9% stake. This structured approach ensures consistency in deal-making and allows startups to plan their funding strategy accordingly.
3.2 Disciplined Deployment and Exit Strategy
Unlike many venture capital firms that rush to deploy capital, AJVC follows a patient investment strategy. The fund has a 10-year horizon, giving startups the time to grow without undue pressure to generate quick returns. AJVC plans to start exiting its investments around the Series B or Series C stage, gradually taking money off the table instead of making complete exits in one go.
4. Industry Trends and Future Outlook
4.1 Growing Role of Micro VCs
The Indian startup ecosystem has witnessed a rise in micro-VCs, addressing the early-stage funding gap. AJVC’s success signals a larger trend where seasoned investors are leaving established firms to launch their own funds. This shift is expected to fuel innovation and create more funding opportunities for startups.
4.2 India’s Changing Investment Landscape
Bhatnagar believes that Indian LPs are now more patient and willing to invest for the long term. Unlike a decade ago, when risk appetite was low, today’s investors are comfortable waiting for returns over several decades. This shift is crucial for fostering a sustainable startup ecosystem.
5. Learning for Startups and Entrepreneurs
5.1 The Importance of Pre-Seed Funding
Startups need to recognize the importance of securing early-stage funding. AJVC’s structured investment model offers a valuable opportunity for founders looking to scale their ventures with minimal dilution.
5.2 Building a Strong Business Model
A well-defined business model is crucial for attracting investors. Founders should focus on revenue generation, scalability, and clear differentiation from competitors.
5.3 Patience in Fundraising
The fundraising journey can be challenging, but persistence is key. Startups must be prepared to pitch to multiple investors before securing funding. Having a strong value proposition and data-backed insights can increase the chances of success.
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