VCs Flocking to GIFT City to Tap Global Investment Opportunities

Set up offices to make use of tax concessions and regulatory simplifications offered

More Indian venture capital firms are setting up offices in Gujarat International Finance Tec-city, GIFT city for short, as this makes it easy for funds to invest in overseas startups and offers an alternative to offshore routes such as Mauritius, several investors told ET.

 

Multiple VCs ET spoke to have either set up in GIFT City or evaluating the region even as more Indian founders move to the US. VC firms that have set up in the region include Blume Ventures, 3one4 Capital, Stellaris Venture Partners, A91 Partners, and Z47, which opened its first office in GIFT City recently. Private equity firms such as Kedaara Capital and Multiples have set up in the region as well.

Vinod Shankar, managing partner, Java Capital, said that they are exploring GIFT city as they are looking to raise funds from overseas investors for their third fund.

 

Data from International Financial Services Centers Authority that governs GIFT City shows that close to 255 alternative investment funds (AIF) are registered in GIFT City. To be sure these are not unique entries, as each AIF can have multiple funds registered.

 

This growing interest has come at a time when more founders are moving to San Francisco, the ground zero for AI, to be closer to customers and tap into talents and technology development early. They are followed by investors, who are investing more in the India-US corridor. For many of them, GIFT City presents a suitable alternative to overseas offshore regions such as Mauritius. There were three reasons why most AIF funds were set up in offshore regions. The Alternate Investment Funds (AIFs) are governed by the Securities and Exchanges Board of India (SEBI), which places a cap on foreign investments.