nexus isn’t going all in on ai, keeping half of its new $700m fund for india startups

Nexus Venture Partners Balances AI Focus with India Investments

Despite the current surge in interest surrounding AI, Nexus Venture Partners is intentionally diversifying its investment strategy for its latest $700 million fund.

Dual Investment Strategy

The firm plans to invest in AI startups while simultaneously targeting companies based in India, specifically within the consumer, fintech, and digital infrastructure sectors.

While acknowledging AI’s prominence as a transformative technology and the substantial venture capital it attracts globally, Nexus argues that overconcentration in a single, rapidly expanding area presents inherent risks.

India as a Counterbalance

India’s expanding digital economy offers a valuable counterbalance, presenting a growing market where AI adoption is increasing and opportunities are more varied.

This balanced approach is deeply rooted in Nexus’s history. Founded in 2006, the firm, headquartered in Delaware with offices in Menlo Park, Mumbai, and Bengaluru, has consistently operated as a unified fund with an integrated U.S.-India team.

Cross-Border Investment Approach

Nexus allocates capital from a single pool to support both early-stage software companies and India-focused startups.

Its investments in cross-border software have spanned various areas, including infrastructure, developer tools, and AI agent startups.

Notable U.S. portfolio companies include Postman, Apollo, MinIO, Giga, and Firecrawl, all of which have gained significant traction in developer tooling and AI infrastructure.

Expanding India Portfolio

The firm’s India portfolio has broadened to encompass consumer goods, fintech, logistics, and digital infrastructure.

Key investments in India include Zepto, Delhivery, Rapido, Turtlemint, and Infra.Market.

AI as an Inflection Point

“AI represents a significant turning point, and we are prioritizing investments in this area,” stated Jishnu Bhattacharjee, a managing partner at Nexus Venture Partners in the U.S., in an interview with TechCrunch.

“However, we also observe that many AI innovations are being utilized to improve services for a wider population.”

Firm Overview and Investment Size

Nexus currently manages $3.2 billion in capital across its funds and has invested in over 130 companies throughout its history.

The firm has successfully completed more than 30 exits, including several initial public offerings (IPOs), demonstrating its commitment to a long-term, early-stage investment strategy.

Abhishek Sharma, also a managing partner at Nexus Venture Partners in the U.S., indicated that the firm’s primary focus remains on inception to seed and Series A funding rounds.

Initial investments often begin with checks ranging from a few hundred thousand dollars to approximately $1 million.

Fund Size and Strategy

Operating with an eight-member investment team, Nexus launched its first fund with $100 million and has maintained a fund size of $700 million since Fund VII in 2023.

The firm typically raises new funds every 2.5 to 3 years.

Bhattacharjee explained that the decision to maintain the eighth fund at $700 million reflects the firm’s belief that this amount is optimal for its early-stage investment approach.

“We are not inclined to raise capital simply for the sake of doing so,” he added.

India's AI Potential

Despite the relative immaturity of India’s AI landscape compared to the U.S. in certain areas, Nexus believes India has the potential to accelerate its progress in several segments of the AI ecosystem.

Bhattacharjee highlighted the country’s substantial talent pool, improving digital infrastructure, and the demand for localized AI models that support India’s diverse languages and specific service requirements.

These factors are driving Indian startups to develop AI applications and agents at an accelerated pace, often leveraging open-source tools and emerging domestic AI infrastructure companies.

Examples of AI Implementation in India

The partners cited Nexus-backed companies like Zepto and Neysa as examples of how AI is being implemented in India.

Zepto, a quick-commerce platform, utilizes AI extensively across its operations – including customer support, routing, and fulfillment – showcasing how consumer businesses are becoming increasingly AI-driven.

Furthermore, infrastructure providers like Neysa are emerging to address India-specific needs, such as sovereign AI workloads, localized data management, and support for the country’s numerous languages.

Fund Performance and Limited Partners

Nexus did not disclose specific fund metrics, but the partners stated that the funds have generated sufficient returns over the years to primarily replenish this fund from existing limited partners.

The firm’s limited partner base includes investors from the U.S., Europe, the Middle East, Southeast Asia, and Japan.