Yali Capital Finalizes Rs 893 Crore Deeptech Fund, Aiming for Eight Portfolio Companies by Year-End
Bengaluru-based Yali Capital has successfully closed its inaugural deep tech-focused fund, raising ₹893 crore (approximately $104 million), surpassing its initial target of ₹500 crore and a ₹310 crore greenshoe option. The fund, registered as a Category II Alternative Investment Fund (AIF) with SEBI, aims to invest in early and late-stage companies across various sectors, including semiconductors, artificial intelligence, robotics, aerospace, and smart manufacturing. Founding Managing Partner Ganapathy Subramaniam highlighted that the fundraising was achieved solely through word-of-mouth, with significant contributions from Indian entrepreneurs, family offices, and corporate backers.
Investment Strategy and Focus Areas
Yali Capital operates through a dual structure, consisting of a SEBI-registered AIF and a feeder vehicle based in GIFT City to attract global investments. The firm has already invested in five startups and plans to add three more to its portfolio by the end of the year. The typical investment size ranges from $2 million to $10 million, with ownership stakes varying from 20% in seed-stage investments to as low as 5% in late-stage deals. The fund allocates 70% of its capital to early-stage investments and the remaining 30% to growth-stage companies, primarily those at Series D and beyond. Subramaniam noted that 45% of the early-stage capital will be directed towards first institutional rounds, while 25% will support follow-on investments.
Operational Approach and Founder Support
Subramaniam emphasized that Yali Capital is not merely a provider of capital but aims to actively support founders in executing their visions. He mentioned that the team has already engaged closely with portfolio startups, dedicating significant time to collaboration. The fund’s early-stage focus will prioritize experienced or university-affiliated founders in deep tech, while its late-stage strategy will leverage the expertise of partner Mathew Cyriac, who has a successful track record of taking companies public. Subramaniam expressed confidence in the potential of India’s deep tech sector, noting that many firms are generating substantial revenue but face challenges in scaling.
Sectoral Insights and Future Investments
The firm identifies manufacturing, robotics, and chip design as key areas with strong founder readiness. Subramaniam pointed out that India boasts the world’s second-largest talent pool in chip design, yet the challenge lies in transforming this talent into competitive product companies. Yali Capital anticipates announcing a significant investment in the chip design sector in the coming weeks. While the domestic deep tech market in India is still in its early stages, Subramaniam believes that the positive response from limited partners and the momentum among founders indicate a long-term growth trajectory. He concluded that the ecosystem is maturing, with a robust pipeline of opportunities, emphasizing the importance of patient capital and effective execution.
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