India-focused venture capital firm Fundamentum Partnership has announced a major expansion of its investment plans by launching its third growth-stage fund and introducing a new platform focused on artificial intelligence (AI) and deeptech startups. The move shows the firm’s confidence in India’s growing startup ecosystem and its belief that AI will play a key role in the country’s future innovation.
The company plans to raise ₹2,200 crore through Fundamentum Fund III, its biggest growth-stage fund so far. At the same time, it has launched Fundamentum Frontier Advisors (F2A), a separate investment platform created to support AI and deeptech startups.
With these two funds, Fundamentum aims to continue investing in successful growth-stage companies while also supporting startups working on advanced technologies.
Fund III Will Back Growth-Stage Startups Ready to Scale
Fundamentum Fund III has a target size of ₹2,200 crore, including a ₹400 crore greenshoe option, which allows the fund to accept additional investments if there is strong demand. The firm has already applied for approval from the Securities and Exchange Board of India (SEBI), and the application is currently under review.
The launch also brings an important leadership change. Co-founder Nandan Nilekani, best known for leading the Aadhaar project, will no longer manage the fund as a General Partner. Instead, he will become the fund’s anchor Limited Partner by making his biggest personal investment in a venture capital fund. The fund will now be managed by General Partners Sanjeev Aggarwal, Prateek Jain, Mayank Kachhwaha, along with Chief Financial Officer Sanjay Chaturvedi.
Fund III will continue to invest only in Series B startups that have already found product-market fit and are looking to grow faster. The fund plans to invest in 8 to 11 companies, with initial investments between ₹100 crore and ₹150 crore. Fundamentum expects to own around 10% to 15% of each company it backs.
Around 60% of the fund will be used for new investments, while the remaining 40% will be kept for follow-on funding to support existing portfolio companies in future funding rounds.
Although the fund is open to different sectors, most of its money will go into consumer technology and fintech startups. Consumer technology includes areas such as digital commerce, healthcare and edtech, while fintech investments will focus on lending, savings, wealth management and insurance. Around 10% to 20% of the fund will also be invested in AI-powered businesses.
The firm says it will continue to invest only in startups that have strong business fundamentals, healthy unit economics and a clear path to profitability. It will stay away from businesses that require very high capital spending.
New F2A Platform Will Focus on AI and Deeptech
Along with Fund III, Fundamentum has launched Fundamentum Frontier Advisors (F2A), a new investment platform dedicated to AI and deeptech startups.
F2A has a total investment capacity of ₹3,000 crore. This includes a ₹2,000 crore SEBI-registered Category II Alternative Investment Fund and another ₹1,000 crore set aside for co-investments and overseas investors.
The new platform will be led by Ashish Kumar, who has moved from the main Fundamentum team, along with Debraj Banerjee, formerly with SIDBI Venture Capital. Nandan Nilekani will also support the platform as an anchor investor.
Unlike Fund III, F2A will invest in startups from Series A to Series D. The platform has an investment period of eight years and plans to support 12 to 15 startups over the next three years. Investment sizes will range from ₹40 crore to ₹150 crore, with an average investment of around ₹90 crore.
The platform plans to divide its investments across three areas. Around 40% will go to consumer AI startups, another 40% to sovereign technology businesses, and the remaining 20% to enterprise AI companies.
F2A is especially interested in sectors that can help India become more self-reliant. These include specialised semiconductors, robotics, drones, defence technology, energy transition and space technology. While reviewing startups, the team will also check whether they can build more of their supply chain within India.
Instead of investing in companies building very large AI models, Fundamentum believes India’s biggest opportunity is in developing small AI language models designed for specific industries and local languages. The firm believes these AI solutions can better serve millions of Indian users through regional languages and voice-based technology.
Strong Portfolio Performance Supports Future Plans
Fundamentum’s new fundraising comes after strong performance from its earlier funds. The company launched its first fund in 2017, followed by a much larger Fund II in 2022. Around 70% of Fund II has already been invested.
According to the firm, Fund II has delivered a gross internal rate of return (IRR) of around 26%, with some estimates suggesting it could reach 35%. Over the past year, companies in its portfolio have recorded average revenue growth of 80% to 123%.
So far, Fundamentum has invested in 17 technology startups. Some of its well-known investments include Spinny, which reported more than ₹4,600 crore in FY25 revenue, Kuku FM, which has crossed 400 million downloads and 10 million paid subscribers, Stable Money, which now manages over ₹6,000 crore in assets, and AppsForBharat’s Sri Mandir, which has crossed 40 million downloads. The firm has also invested in PharmEasy, even though the company has faced valuation cuts and financial challenges in recent years.
With the launch of Fund III and the new F2A platform, Fundamentum is expanding its support for both fast-growing startups and the next generation of AI and deeptech companies. The firm believes this balanced approach will help strengthen India’s startup ecosystem and support the country’s long-term technology growth.