This Venture Capital Fund is Betting Big on Gaming and VR An early-stage TMT venture fund investing across India and the US, it is focused on providing global investors access to the vibrant Indian digital landscape, while enabling domestic scale-ups to enter global markets
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Audacity Venture Capital is focused on nurturing startups and innovations in the Enterprise and Consumer Media, including social networks, creator economy, Virtual Reality and Augmented Reality applications and gaming.
An early-stage TMT venture fund investing across India and the US, it is focused on providing global investors access to the vibrant Indian digital landscape, while enabling domestic scale-ups to enter global markets shares its founder and managing partner Kabir Kochhar with Entrepreneur India.
Before establishing the VC in 2022, Kochhar served as a partner at Anthill Ventures, where he led all early-stage investments in the media, consumer and enablement verticals.
"While the frost of the funding winter is not completely gone, the investment landscape is showing signs of a spring revival, especially in areas aligned with artificial intelligence applications. At this point, we can say that the greatest AI adoption has been generated primarily in the Media space," he notes.
It led a USD 9.5M Series A round for Rusk Media and participated in Videoverse's USD 46.8M Series B round.
Funding trends
Indian Startups raised USD 732 M across 107 deals in January, a dip from USD 1.7 billion in December and the lowest for the month in three years.
"The current funding environment favours early-stage startups due to their smaller capital requirements, which align with a more risk-conscious investment strategy," he adds. In situations where VC or angel funding is unfavourable, he advises alternative financing methods like crowdfunding and revenue-based financing which "are gaining traction."
He notes the trend of pivoting towards injecting capital into burgeoning cities beyond the traditional metropolises. Notably, 50 per cent of 115,000+ startups registered by the Department for Promotion of Industry and Internal Trade (DPIIT) hail from tier-II and tier-III cities. A report by Primus Partners states that funding increased from USD 37,500 crore in 2021 and USD 75,000 crore in 2022 to USD 1,12,500 crore in 2023.
Kochhar feels that an easing of the funding winter is not expected until the end of 2024.
Gaming and VR
India's gaming sector was valued at INR 16,428 crore in FY23 and is expected to touch INR 33,243 crore by FY28. Virtual reality and augmented reality are poised to revolutionize the gaming and esports landscapes substantially. Currently, the AR/VR market has a high cost of personal VR setups, "As the technology advances, bolstered by AI, we'll see the creation of more intricate and interactive VR worlds, enhancing the user experience and expanding the infrastructure necessary for gaming and esports."
"Beyond gaming, we see VR disrupting the media consumption, both in entertainment and live sports," he adds. Kocharr and Audacity value AR more as a significant boost for the production industry, improving quality testing and product development efficiency.
With the impact and aftereffects of GST regulations on the domestic gaming sector halting the promising growth of the sector, he feels that despite the hurdles, gaming remains a substantial opportunity within India's vibrant startup environment.
"Current market dynamics have prompted us to adopt a more observational stance in the consumer gaming segment. Nevertheless, we are keenly monitoring several promising startups in the gaming infrastructure, as these technologies can grow well beyond the gaming ecosystem, impacting the larger media infrastructure," says he.
The fund and how it works
It launched a USD 60 million fund to invest in early-stage media tech companies bridging the gap from Web2 to Web3. "From our fund's inception, we've strategically shifted to serve as a bridge for Indian scale-ups to enter global markets and assist international entities in navigating India's vast consumer sector," he shares.
The two key factors that propelled to launch of the fund were the growing interest from overseas investors in India and the Web3 sector yet to reach its full potential. "Currently, we view Web3 as an amalgamation of various tech drivers, heralding a future of a decentralized web. However, blockchain technology must still clear regulatory hurdles before it can redefine areas such as decentralized finance and intellectual property management," he adds.
Under the fund, they are betting on individual companies who are driving Web2 to Web3 developments, "At the foundational stage, our investments are directed towards the visionaries behind the ventures—those pioneering founders, rather than the product they're building." Accordingly, Audacity VC doesn't see the mass adoption of web3 at the current time.
What's next?
With 15 companies under its investment portfolio, apart from gaming, the VC has a full pipeline of innovative startups in the AI-enhanced music production, post-production, AdTech, and MarTech space which they plan to invest in. "We are very cognizant of the timing of making these investments at the inflection point, right before they're about to scale up," he concludes.
