Nexus Venture Partners, a venture capital firm with a global footprint, is strategically allocating its new $700 million fund, demonstrating a measured approach to AI investments while reaffirming its commitment to the Indian startup ecosystem. While the fund will focus on sectors including AI, SaaS, Fintech, and Commerce, a significant portion is earmarked for supporting startups in India. This decision underscores Nexus's belief in India's potential as a hub for innovation and digital growth.

Founded in 2006 by Naren Gupta, Sandeep Singhal, and Suvir Sujan, Nexus Venture Partners has been a key player in fostering entrepreneurship in both the United States and India. The firm's investment strategy often involves early-stage funding rounds, particularly Seed and Series A, backing startups across various sectors. With the new fund, Nexus's total assets under management will reach $2 billion.

Nexus's approach reflects a broader trend of investors recognizing the increasing valuations of Indian technology companies. Despite a recent dip in private equity and venture capital investments, Nexus is confident in the long-term prospects of the Indian market, driven by increasing digital consumption and advanced mobile data networks.

The firm's investment focus aligns with the evolving landscape of early-stage software investing. Arjun Gandhi, Vice President at Nexus Venture Partners, noted that the benchmarks for SaaS startups have shifted, with top-tier AI SaaS companies now requiring $3-5 million in annual recurring revenue (ARR) for a Series A round. However, Nexus emphasizes a holistic approach, considering the team's capabilities and execution potential, sometimes investing even pre-revenue with just a prototype.

Nexus recognizes the growing trend of Indian founders seeking opportunities in the US market. The firm actively encourages its portfolio companies to establish a presence in the United States early on, to be closer to customers and the AI ecosystem. This migration is driven by the vast difference in the scale of the software market between the US and India.

Despite the allure of the US market, Nexus remains dedicated to supporting Indian startups, particularly those focused on enterprise solutions. While nearly 70% of the AI startups Nexus evaluates in India target enterprise use cases, the firm acknowledges the long-term potential of research-led ventures in the country. Nexus has already invested in approximately 20 AI startups in India, including Neysa, Pratilipi, Cognida.ai, and Jiffy.ai.

Nexus's "one fund one team" approach, with a presence in Menlo Park, Mumbai, and Bengaluru, allows it to provide unique support to entrepreneurs in both the US and India. This strategy combines entrepreneurial and operational experience, giving startups a competitive edge in the global market.

By allocating a significant portion of its new fund to Indian startups while strategically investing in AI, Nexus Venture Partners aims to strike a balance between capitalizing on emerging technologies and fostering innovation in a rapidly growing market.