gradCapital Launches $6 Million Fund for Indian Student Startups
- ByStartupStory | September 1, 2023
gradCapital, an Indian student-driven institution, has launched its second fund worth approximately $6 million to invest in student startups. The fund offers a $40,000 investment in exchange for 4% equity to selected entrepreneurial students. These students also receive a four-week cohort experience in Bengaluru, providing an opportunity to connect with successful entrepreneurs like Tarun Mehta (Co-founder of Ather Energy), Shashank (Co-founder of Razorpay), Kailash Nadh (CTO of Zerodha), and others.
Key investors backing gradCapital include CIIE, IIM-Ahmedabad, Alagu Preiyannan, Ankur Warikoo, and Kanwal Rekhi. Notably, around 30% of companies that undergo the cohort phase secure an average follow-on funding of $600,000, often from investors like Lightspeed and Rainmatter Capital. gradCapital receives approximately 3,000 applications for funding each year, with only 20 startups being selected.
In addition to equity-based investments, gradCapital provides a $5,000 grant called the Atomic Fellowship, supported by Emergent Ventures. This grant is aimed at students working on scientific projects that could evolve into business ideas and innovations.
The fund was founded in 2021 by alumni of BITS and IIMA and has experienced significant growth, now operating at double its initial value within just 18 months. The initiative aims to empower ambitious students and enable them to build innovative ventures despite challenges posed by the education system. It acknowledges the unique advantages students have, such as the ability to collaborate with friends, think big, and be agile in their projects.
gradCapital’s efforts align with expectations of a funding resurgence in the Indian startup ecosystem over the next 6 to 12 months, following a prolonged period of reduced investment activity. This anticipation is in line with a survey conducted by consultancy firm RedSeer, which revealed that many investors foresee a return to the long-term trend line in terms of startup funding value and volume. The Indian startup ecosystem is expected to witness an infusion of $12-15 billion across 700-900 funding deals in 2023, resembling funding levels from 2018 to 2020. Furthermore, 2024 is expected to see a recovery with funding ranging from $15-20 billion in 1,000-1,200 deals.
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