An alternative investment fund pools capital from investors and deploys it in a range of assets that are considered distinct from traditional investments.
They may offer different types of investments that could potentially have higher returns or provide diversification benefits beyond what traditional asset classes could offer.
In India, a Category II AIF is where money is put into funds investing in private businesses, where there may not be incentives or concessions provided by regulators.
Vijay Shekhar Sharma is an Indian tech entrepreneur who is the founder and MD of One97 Communications and its consumer brand Paytm.
In October 2023, he is said to have launched a Category II AIF called VSS Investments Fund.
This would be sponsored by VSS Investco Private Limited, an entity controlled by Vijay Shekhar Sharma.
This fund would have a total size of about 20 crore rupees.
There would be a green shoe option of about 10 crore rupees.
A green-shoe option is a financial arrangement that allows for more shares to be sold than originally planned.
It’s like having a safety net.
This would be dedicated to investing in Indian startups specializing in AI and EVs.
The primary objective is said to be incubating startups within India.
Vijay Shekhar Sharma has voiced his conviction that India has the potential to evolve into a powerhouse of advanced tech and AI-driven innovations.
He sees India’s aspiration to be a $10 trillion “aatmanirbhar” economy defined by the spirit of innovation and entrepreneurship.
AI and EVs could be gaining momentum in India.
According to Inc42, India’s generative AI market is projected to hit about $17 billion by 2030 from $1.1 billion in 2023, growing at a CAGR of close to 50x.
And the EV sector may be gaining traction due to environmental concerns and a focus on energy efficiency.
But, there could be risks, due to evolving regulatory challenges, which could impact investment decisions and exit strategies.
EV and AI businesses may require substantial capital for R&D and scaling.
Liquidity events could take longer, with EV and AI projects having longer gestation periods.
And in India, the market readiness for AI and EVs could vary from region to region.
This isn’t the first time that he’s ventured into the world of startup funding.
He had, also, initiated the Massive Fund.
This is a climate fund that was aimed at investing around $150 million in startups operating in areas, such as food, agriculture, air and water pollution, renewable energy, recyclables and mobility.
