Bat VC launches $100 million fund to back US and Indian AI startups
A VC firm that plans to back buzzy early-stage AI startups across the US and India has just launched a second fund with a target close of $100 million.
New York-headquartered Bat VC, founded by a trio of Indian tech veterans from Yahoo, Twitter India, and Intuit, is currently raising its second fund. It aims to back early-stage startups predominantly in the AI, fintech, and enterprise sectors, cutting checks of $3 million to $5 million.
The VC firm has made a strategic decision to back startups across India and the US — two markets it sees teeming with potential for startups to bilaterally scale, particularly as the US and China remain in a trade war.
Bat VC's managing director and general partner, Aditya Mishra, said Fund 2 serves as a follow-on pot for the firm's first fund, a $8.2 million vehicle that is on track for a 29% internal rate of return and has two exits so far.
"We look at early-stage from the lens of whether startups have achieved product market fit," Mishra told Business Insider. "You could have a very strong team, but you may be lacking the sales and the go-to-market skill set, or you may not have a good team technically, but you are pretty good at selling whatever you have."
Bat VC is still fundraising for the first close of its second fund and is in talks with over 10 limited partners, including institutional LPs, family offices, fund of funds, and high-net-worth individuals, Mishra told BI.
A global trade shift is spurring more VC interest in India
While US startups rake in the most VC funding globally, India is experiencing a startup boom. As of January, the country reported having over 159,000 recognized startups and credited them with creating about 1.7 million direct jobs since 2016, according to India's Ministry of Commerce and Industry.
The country is increasingly a hotbed for Big Tech operations. Apple produced $22 billion worth of iPhones in India in the 12 months preceding March as the tech giant pivots its manufacturing base away from China, while Meta is in talks to set up its first data center in India.
There's also a growing trend of reverse brain drain. Encouraged by India's growth and market size, Indian expats who moved to the US to work in Big Tech are leaving hefty paychecks behind to return home and build consumer and fintech startups.
Although the trade war between the US and China is facing a 90-day reprieve, the uncertainty could make India a more attractive alternative choice for investors seeking tech talent and opportunities to scale their startups in software-savvy markets.
All of this has created fertile conditions for tech innovation in India, particularly in AI, said Ravi Metta, Bat VC's US head and general partner.
"Because of the AI resurgence, companies across the world are pushing more work into India," he said. "What's going to happen because of that is that more and more people in India will start becoming entrepreneurs, building these global companies using AI."
Supply chain constraints could also lead to more Big Tech companies setting up in India, and leaning on AI to carry out work in areas like logistics, Mishra told BI, adding that this could lead to more robotics and manufacturing innovation in the country.
Manish Maheshwari, Bat VC's India head and general partner, told BI that many US founders may want to access India, particularly for enterprise software, and compared it to the US-Israel corridor, but with the potential to be "10 times bigger."
As the US seeks more economic ties to alternative manufacturing hubs in Asia, India's bilateral relationship with the US is "going to be an order of magnitude higher," he added. "So that is where India also has an advantage."
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