India's Nexus Venture Partners is in advanced talks to raise a $700 million fund, the second-biggest such pool to be garnered in the country in the past year, to invest in domestic and the U.S.-based technology firms, two sources with direct knowledge said.
The planned fund raising, which one of the sources said will close within two months, is an indication that investors may be starting to get more comfortable with Indian technology company valuations after the poor market performance in 2022 of some high-flying start-ups and amid a global tech sector rout.
It would also expand the pool of funds available to start-ups, at a time when fundraising by Indian start-ups fell by a third last year to $24 billion, Venture Intelligence data showed.
Founded in 2006, Nexus was one of the first Indian venture capital firms to invest in U.S. and India-based software start-ups. The new fund will be its seventh so far and take the firm's assets under management to more than $2 billion.
Some of Nexus' existing investors include global pension funds, billionaire family offices and endowment funds. The new fund has received a strong response from endowments, one of the sources said, without sharing names of any specific investors.
Nexus will invest the new funds - which will be the biggest raised in India after Sequoia's $2.85 billion fund in mid-2022 - in early stage funding rounds of Indian internet and technology start-ups, as well as U.S.-based software firms, the sources said.
Nexus believes investing in U.S. software firms will help it hedge its bets and provide more stability than high-profile Indian start-ups which often burn billions of dollars in growth phase to achieve fast growth and attract users, they added.
And Nexus is betting that India - where internet and mobile phone usage is rising rapidly - will remain a long-term, attractive bet for investors of its new fund, one of the sources said.
Mumbai-based Nexus did not respond to a request for comment. The sources declined to be named as the discussions are private.
Investors have turned cautious about lofty valuations amid a global tech rout - India's digital services companies Paytm and Zomato have plunged after making their market debuts in 2021.
Nexus' current bets include Indian logistics firm Delhivery , online education firm Unacademy and U.S.-based software companies PubMatic Inc and Postman, all of which clocked multi-billion-dollar valuations in recent years.
Nexus was co-founded by Naren Gupta who ran a software company in the United States for 15 years before selling it to Intel. Gupta, one of India's most renowned venture capitalists, died in 2021.
Another co-founder, Sandeep Singhal, left the firm in 2021, while the third co-founder, former eBay India and PayPal executive Suvir Sujan, is one of the current managing directors.