Venture fund MGF-Kavachh raises Rs 400 crore, closes first deal

New Delhi: A venture fund set up by former defence secretary Ajay Kumar has raised Rs 400 crore and closed its first deal, with three more deals approaching finalisation.

In a first for a former defence secretary of India, Kumar turned an entrepreneur by launching MGF-Kavachh, an alternative investment fund approved by the Securities and Exchange Board of India, in January, following the completion of his mandatory cooling-off period after retirement.

"We have so far raised Rs 400 crore with a visibility of reaching Rs 500 crore soon. Our plan is to invest in 30 startups in sectors like defence, space and deep tech," Kumar told ET in a phone interview from Washington DC, where he is currently on a work trip.


The 61-year-old former Indian Administrative Services (IAS) officer said the fund has closed its first deal, but declined to disclose further details ahead of a formal announcement expected later this week. At least three more deals are in the pipeline, he said.

Delhi-headquartered MGF-Kavachh, backed by contributions from 32 limited partners, primarily high-net-worth individuals and family offices, is focused on bolstering India's growing defence sector, as more and more startups have begun production of cutting-edge weapons, ranging from drones to drone-dropped bombs.

Asked about the size of the proposed deals in targeted startups, Kumar said, "I prefer not to mention an average investment size as it can be misleading. For early-stage companies, we plan to invest around Rs 3-4 crore, while for more mature companies with higher valuations, we may invest as much as Rs 30-40 crore."