Z21 Ventures Fully Deploys First Fund, Plans $40 Million Second Fund

California-based early-stage investment firm Z21 Ventures, which supports startups in India and those founded by Indian-origin entrepreneurs in the US, has fully deployed its initial $5 million fund. The firm is now gearing up to launch a second fund worth $40 million, according to one of its founders.

About Z21 Ventures

Z21 Ventures, established in 2022, operates as a collective of Indian-origin technology executives in the US. These executives serve as limited partners (LPs) or sponsors of the fund, including prominent figures from companies like Innovaccer, Nutanix, Google, Cisco, Apple, Amazon, and Meta. The firm was co-founded by Abhinav Shashank, CEO of Innovaccer, and Raj Shekhar Singh, a former senior executive at Innovaccer.

Investment Focus

"We’re a community fund focused on the India-US corridor. The idea was to invest small amounts of around $100,000 to $150,000 in startups operating in the enterprise, software, and hardware areas, and also provide them with the opportunity to work with operators who have been in these areas before," said Singh, who is a general partner at Z21 Ventures.

The firm’s focus remains on enterprise software startups and those in the hardware space. With the second fund, Z21 Ventures plans to increase its investment size to $0.5-1 million per startup.

Launch of Second Fund

“We’re starting fund-II with a target of $40 million. We’re in the process of raising that fund and will start deployment soon. In fund-II, we’ll have a few institutional investors as well, because only with individuals you can’t raise that much money, but the approach remains the same,” Singh explained. The firm will continue to invest in seed stages and also look at participating in follow-on rounds of its portfolio companies.

Performance and Plans

Jyotika Gupta, cofounder and partner at Z21 Ventures, noted, “The idea with the first fund was to test the hypothesis of the operator-led VC model. We’ve gotten good feedback from both our LPs and founders. Now, we want to scale this model.”

Z21 Ventures has backed 27 startups through its maiden fund and aims to invest in as many through the second one. The firm’s current portfolio includes companies like Fireside Ventures-backed Inito, Peak XV Partners-backed Truefoundry, and Y Combinator-backed Explorex.

Community and Institutional Support

“Our focus is on enterprise SaaS because that’s where our expertise lies. But we also invest in startups that have IP-driven hardware,” Singh said, adding that IP-driven hardware constitutes a third of the company’s portfolio. Singh mentioned, “Around $10 million, or one-fourth of the second fund, will come from community leaders, and we’ll have 100 people join as LPs. The remaining $30 million will come from institutional investors.”

Z21 Ventures aims to build a community of investors even within the institutional segment to support larger funding rounds.

By leveraging the expertise and network of Indian-origin technology executives, Z21 Ventures is well-positioned to support and scale innovative startups in the enterprise software and hardware sectors, driving significant advancements in these areas.