Aviral Bhatnagar's A Junior VC (AJVC) has successfully closed its first Rs 100 crore fund, aimed at targeting the pre-seed funding stage in India, which Bhatnagar believes remains largely underexplored in the world's third-largest startup ecosystem.

Bhatnagar, who previously worked as an investor at early-stage investment firm Venture Highway, had left the firm just before it was acquired by the Silicon Valley-based General Catalyst in June 2024. He stated that he plans to invest in 12-15 pre-seed companies annually, focusing on emerging sectors such as artificial intelligence (AI), as well as trending technologies like SaaS (software-as-a-service) and consumer technology.

Bhatnagar said that the sector-agnostic fund was oversubscribed beyond the target and the VC has been considering exercising the green shoe option.  “We are seriously considering exercising the greenshoe option given the overwhelming interest in the fund,” AJVC told YourStory in an interview. Limited partners (LPs) in the fund consist largely of family offices in India, founders, high-net worth individuals (HNIs), and leaders in larger conglomerates or investment firms, Bhatnagar told YourStory. Domestic capital makes up the majority of the fund’s money pot with only 10% of foreign invested capital.

Bhatnagar further said that the sophistication of domestic capital in India has changed over the past few years. “A lot of people have got access to wealth probably because of public markets or scale founders, etc. Their risk appetite was very surprising to me.I don't think that was the case for a lot of people raising their funds maybe 10 years ago.” Bhatnagar said that domestic LPs are 'unusually patient', often seeking returns over a few decades rather than immediately. 

His comments, however, contrast the general sentiment as VCs in India have started facing pressure from LPs to return capital. With respect to returns, Bhatnagar, who’s the Founder and Managing Partner at the fund, said, “So I think in India, if you are operating at this stage, there is a certain number beyond which it starts becoming a little difficult to return the fund. In my head, that's about Rs 600 crore. That's where you start reaching a stage and that's because in India, the number of companies that will reach Rs 10,000 crore are not going to be as much as the US”.

AJVC will start looking to exit the companies between Series B or Series C, Bhatnagar said. The VC might not exit the startup completely in one go and will look to gradually start taking some money off the table. However, the firm is in no hurry to deploy, Bhatnagar said. “We have a 10 year plus fund. There is no pressure to deploy, to return that capital at an aggressive pace. We won't push companies. If they need, we'll support them for as long as possible”, Bhatnagar added.

AJVC has already made nine investments—five in artificial intelligence, two investments in direct-to-consumer brands, one in business-to-business (B2B) and one in consumer tech.  Amidst the growing global interest in AI, Bhatnagar said the firm is not looking to invest in startups building foundational AI models. A foundational model AI is an AI network that has been trained on large amounts of data. Examples of these models include OpenAI’s GPT and Meta’s AI Llama models.  

“A foundational model might be very hard for us to do, given the quantum of our checks. We do 1.5 crores for 9%. That's our standard. And we don't change it. For the 9 investments we've done, it's all the same. That amount of capital may not be sufficient for supporting a foundational model”.  However, AJVC might look to invest in startups that are involved in the early stage set up of AI, and deeptech such as setting up a satellite for a company. The firm is bullish on deep tech and is looking to be active in the segment.  

The closure of the fund comes at a time when an increasing number of MicroVCs are emerging in the country to address the early-stage funding gap, as investors grow more selective. This trend was also highlighted in Blume’s Indus Valley report released last month. Bhatnagar mentioned that AJVC has received more than 5,500 applications since the fund’s launch