Abu Dhabi VC eyes booming Indian economy

December 5, 2022, 10:16 AM

AUM Ventures has launched a $30 million fund
Aims to serve as a bridge for Indian companies to expand into UAE
India’s GDP set to double from $3.4trn to $8.5trn over next 10 years

Abu Dhabi-based Indian venture capital (VC) firm AUM Ventures has launched a $30 million fund to offer international investors access to tech, tech-enabled and consumer startups in India.

The early and pre-growth stage VC firm, which has offices in Abu Dhabi, Bangalore and Mumbai, is licensed and regulated by Abu Dhabi Global Market (ADGM).

The fund also aims to serve as a bridge for its Indian portfolio companies to expand into the UAE and wider Middle East markets with an opportunity to raise follow-on capital globally.

“Family offices need an access point into India and that’s what we want to be,” Chetan Mehta, founding partner at AUM Ventures, told AGBI.

“India as an investment has really evolved in the last few years. I see a trend where people are now focusing on the east, not the west.”

Rising interest in the south Asian sub-continent, from both global and domestic investors, dovetails with India’s economy overtaking the UK this year in terms of size.

It is now the fifth largest economy, according to latest figures from the International Monetary Fund (IMF), and is expected to become the fourth largest economy by 2027. Just a decade ago, Indian GDP was the eleventh largest in the world.

“With the growth rates envisaged, India is the only country presenting a more than six percent growth, while the US is just 1.5 percent and the UK is also struggling,” Mehta said.

“Earlier, most US and European family offices were always comfortable investing in their own regions. Of course, the US has performed very well over the last 20 years. They have delivered returns and exits have been faster, while in India and other emerging economies that has always been a challenge.

“But a lot has changed and I believe that India is at an inflection point where compounding will start to take off, which will catapult it to the next level,” he said.

Global investment bank Morgan Stanley said in a November forecast that India will account for a fifth of total global economic growth in the next decade, attributed to the expanding size and scale of the country’s economy.

The report said India’s GDP is set to double from the current $3.4 trillion to $8.5 trillion over the next 10 years.

India is already the fastest-growing economy in the world, clocking 5.5 percent average gross domestic product (GDP) growth over the past decade.

Mehta, a seasoned early-stage investor with a track record as both a CEO for family offices and an angel investor, covering both India and global markets, noted that India is the youngest startup nation and home to the third most unicorn-valued startups in the world.

“A lot of investors don’t realise that India is still one of the vibrant democracies in the world, unlike China and other countries,” he said, adding that India’s tech prowess is becoming a force to reckon with.

“The world is looking at India in terms of how it can do a tech stack at a country level, that has the latest technology and is regulated.”

India Stack is the name used to describe a set of open application programming interfaces (APIs) and digital public frameworks that governments, businesses, startups and developers can utilise as infrastructure to solve problems for the nation’s vast population using technology.

Indian Prime Minister Narendra Modi said earlier this year that India’s digital initiatives will help make the next decade “India’s techade”.

Mehta, who has built a global portfolio of more than 60 startups across India, Israel, UAE and the US, added that AUM is also looking to back Indian founders who want to bring their businesses to regional markets.

“One of our key focus areas will be to bring our Indian portfolio companies to the UAE, help them set up their regional base at ADGM, and be their growth enablers in the region,” he said.

“We will seek to invest in non-consensus, overlooked and underfunded sectors off the radar of other firms, believing that founders can create entire market categories through bold ideas.”

So far, AUM Ventures has invested in 11 companies, including space tech startup Skyroot Aerospace, dental care startup Smiles.ai, cross-border e-commerce platform GlobalFair, hygiene companies Svish and LemmeBe, gaming platform Esports XO, micro mobility startup Fenix, education technology platforms Myways.ai and Krayonnz, and artificial intelligence startup Firstsense.

Several deals have already received follow-on capital from large institutional investors.