Earlier this week, Indian Prime Minister Narendra Modi introduced a set of initiatives, called Startup India, designed to help the country’s fledgling tech companies and their investors. One of the first Silicon Valley venture capital firms to take advantage of Startup India is Storm Ventures, which just launched a new fund for SaaS startups in India.
The firm has allocated at least $10 million to the Storm India SaaS Fund and plans to increase that amount depending on how quickly capital is deployed, says venture partner Anshu Sharma. The money will come from the $180 million fund Storm raised last year.
The Storm India SaaS Fund will look for companies with an annual run rate between $1 million to $10 million and participate mainly in seed and Series A rounds.
Three of Storm’s five partners—Sharma, Sanjay Subhedar, and Arun Penmetsa—grew up in India. Sharma says they want to find the next Salesforce or Zendesk in their home country.
“We invest mostly in companies that are based in the U.S., but what we’ve noticed over the last few years is that India is now where China was five to seven years ago,” Sharma told TechCrunch. “There will emerge a whole set of new application companies to support the new e-commerce and payment ecosystem, so we think it’s great timing.”
Closing The Gap Between India And Silicon Valley
While Storm Ventures has cut checks for Indian startups before (an example is marketing automation startup Blueshift Labs), it looks for promising companies from around the world.
The creation of Startup India, however, made a launching an Indian-specific fund a straightforward decision, says Sharma. Not only does it include incentives for investors, like tax breaks on capital gains, but also reassures founders that the government takes India’s new tech companies seriously.
“Entrepreneurs are now excited about the potential of India. There is a feeling in Silicon Valley that the government of India understands startup ecosystems and is making it easy to do business in India,” says Sharma.
He believes this will encourage Indian founders to broaden their horizons.
“The most interesting thing to me is how people from small towns have global ambitions now, which is something that I frankly didn’t see growing up in India. The world was so large that you didn’t dream of serving a customer in America when you were growing up in a mid-sized town in India.”
India’s booming e-commerce market, which is expected to be worth $100 billion by 2020, has created an ecosystem of startups that develop software to support online commerce, payments, and logistics. The Internet of Things and healthcare are also important industries for SaaS providers. Sharma says the fund will invest in startups that plan to serve companies in the United States and other international markets.
For example, one of Blueshift Lab’s first clients was Indian e-commerce giant Snapdeal, but the company, which helps clients create targeted email campaigns, also works with U.S. clients and its founders sold their previous startups to Groupon and Walmart.
“That’s a good example of the new Silicon Valley footprint,” says Sharma. “Silicon Valley and Bengaluru are closer to one another than Silicon Valley and Chicago, because you have people, ideas, and capital moving freely between those two cities.”