Venture capital firm Nexus Venture Partners announced a new $700 million fund, strategically balancing investments between the booming field of artificial intelligence and the rapidly expanding digital economy of India. The firm will continue to support early-stage software companies while simultaneously increasing its focus on consumer, fintech, and digital infrastructure startups within India, recognizing the potential for diversification amidst a crowded AI investment landscape.
Founded in 2006, Nexus operates with integrated teams across Delaware, Menlo Park, Mumbai, and Bengaluru, managing $3.2 billion in capital and having invested in over 130 companies. This new fund, its eighth, maintains the firm’s existing $700 million size, reflecting a deliberate strategy focused on early-stage investments rather than simply scaling fund size.
Balancing AI Investment with India’s Growth Potential
While acknowledging artificial intelligence as a “huge inflection point,” Nexus Venture Partners believes concentrating solely on AI carries inherent risks. According to managing partner Jishnu Bhattacharjee, many AI innovations are ultimately designed to improve services for a broader population, and India presents a unique opportunity to witness and capitalize on this trend. The firm’s approach aims to mitigate the risks associated with an overheated AI market by diversifying into a region with substantial growth potential.
A Long-Term, Cross-Border Strategy
Nexus has historically operated with a dual focus, backing both U.S.-based software companies and Indian startups from a single capital pool. Its U.S. portfolio includes companies like Postman, Apollo, and MinIO, focused on developer tooling and AI infrastructure. Simultaneously, its Indian investments span sectors like quick commerce (Zepto), logistics (Delhivery), and financial technology (Turtlemint). This integrated strategy allows Nexus to identify synergies and leverage opportunities across both markets.
The firm’s investment sweet spot remains inception to Series A funding rounds, with initial checks ranging from a few hundred thousand dollars to around $1 million, according to managing partner Abhishek Sharma. This early-stage focus allows Nexus to support companies from the ground up and build long-term relationships.
India’s Unique AI Landscape
Nexus believes India is poised for significant advancements in artificial intelligence, potentially leapfrogging some of the challenges faced by more developed markets. The country’s large and skilled talent pool, coupled with its expanding digital infrastructure, creates a fertile ground for AI innovation. Additionally, the demand for localized AI models that support India’s diverse languages and specific needs is driving the development of unique solutions.
The firm points to portfolio companies like Zepto, which utilizes AI across its operations, and Neysa, an infrastructure player focused on sovereign AI workloads, as examples of this trend. These companies demonstrate how AI is being integrated into existing businesses and how new infrastructure is emerging to support India’s specific requirements. The growth of the fintech sector in India is also expected to benefit from AI-driven solutions.
However, India’s AI journey is still developing. While progress is rapid, the country lags behind the U.S. in certain areas of AI research and development. This gap presents both challenges and opportunities for investors and entrepreneurs.
Nexus Venture Partners has largely funded this new fund through returns to existing limited partners (LPs), indicating strong performance across its previous investments. Its LP base is geographically diverse, spanning the U.S., Europe, the Middle East, Southeast Asia, and Japan.
Looking ahead, Nexus Venture Partners will continue to deploy capital from its new fund over the next several years, focusing on both AI startups and India-focused companies. The firm will be closely monitoring the evolution of the AI landscape and the growth of India’s digital economy, seeking opportunities to support innovative companies that address significant market needs. The success of this strategy will depend on navigating the complexities of both the global AI race and the unique dynamics of the Indian market, and the firm expects to make its first investments from the fund in the coming months.