New Delhi, July 13 -- Asset management firm Alpha AMC is likely to upsize its maiden small and medium enterprises-focussed fund VentureX, seeing the interest expressed by investors, a top company executive told VCCircle.

The Category I alternative investment fund (AIF), launched in early 2025, takes exposure in small and medium enterprises (SMEs) with a market capitalisation of below Rs 3,000 crore.

With feedback from investors being positive, the Venture X fund may double its initial target corpus and aim for Rs 1,000 crore, including a greenshoe option of Rs 500 crore, said Rajesh Singla, fund manager and chief executive officer, VentureX.

The fund has so far secured commitments to the tune of Rs 250 crore, said Singla, adding that it had managed to raise Rs 100 crore in the very first month of its launch.

"We had a target corpus of Rs 500 crore including a greenshoe of Rs 250 crore but given the interest and feedback from investors, we will most likely take it to Rs 1,000 crore including Rs 500 crore greenshoe option. So far we have been able to garner commitments to the tune of Rs 250 crore from domestic investors," he said.

The fund has tapped high-net-worth investors, ultra-HNIs and family offices to raise capital. Singla said the fund is also in talks with domestic institutions to widen its capital pool.

"SMEs are usually in the news for the wrong reasons. But the real story is different. Companies with strong business models and scalable operations are creating immense value," said Singla.

He pointed out that India has over 5,000 publicly listed companies, of which roughly 3,600 sit in the SME segment, which are businesses with market capitalisation under Rs 1,000 crore that large fund houses rarely cover. "That gap is where the opportunity lies," he said. "SMEs have delivered a 61% CAGR over the last five years, more than double Nifty Small Cap's 28% and three times Nifty 50's 20%. In 2024, 239 SME IPOs delivered average returns of nearly 135%," he elaborated.

Sectors, investing rationale

The fund takes exposure in listed as well as unlisted SMEs. It has so far invested in 35 companies, of which 28 are listed and the rest are in the pre-IPO stage. As for interested sectors, it takes bets on those that have strong tailwinds and government support including power, waste management, defence, railways, AI, consumer discretionary, chemicals and manufacturing.

It has so far deployed Rs 120 crore and created a portfolio that includes companies such as JD Cables, MV Electrosystems, KV Toys and DIRO.

The company claims that it selects companies through its LMVT framework (Leadership, Moat, Valuation, Tailwinds), evaluating promoter execution and governance, sustainable competitive advantages, valuation discipline, and structural growth themes. It also claims to follow a four-stage due diligence process before making every investment, with mainboard migration serving as a key exit opportunity.

"Astute investors recognise what the budget means for SME companies, and they choose the fund because they want rigorous due diligence done on their behalf before they commit capital," said Maneesh Nath, VentureX's fund manager.

He added that the segment contributes nearly 30% of India's GDP and employs over 110 million people, a scale of opportunity that institutional capital has largely overlooked until now.

Published by HT Digital Content Services with permission from VC Circle.