Golden Sparrow - Q1, 2025 Newsletter
Golden Sparrow is an $8 million India-focused, early-stage fund. We invest in Rare Birds across Deep Tech, Infra, Enterprise Software and AI.
“The returns accrue at the frontier” — Mario Gabriele
Portfolio Construction
We launched Fund I in June 2023. 65% of our $8 million fund is now deployed across 13 founders. Two of our investments have raised at markups and another two more are raising at 2x–4x our entry valuation. Four are on the path to cross $ 1 million in ARR this year, setting up for Series A. We surf where others will not, while staying wired into the broader venture network.
This quarter, we backed Hosted AI, building AI infrastructure software. The CEO, an eight-time founder, brings rare clarity on company-building and is unlikely to settle for less than a multi-billion-dollar outcome. We found him early. We gave the first term sheet. Others followed.
We aim to make four more investments this year before Fund II. We are reserving dry powder—balancing follow-ons where early traction is compounding, while maximizing shots on goal. AI is now table stakes. Enterprise Software, Infra, and Deep Tech remain core to our thesis.
In India, few funds back Deep Tech at true pre-seed. Fewer touch Biotech or Nanotech. We do. Consistent outperformance in venture comes from asymmetric insight—not just access. The best GPs either dominate a niche or reinvent fast. We choose the latter. Our sourcing engine is founder-first, frontier-focused. Our Venture Partners bring rare domain expertise and work shoulder-to-shoulder with teams. We underwrite technical risk early, before others engage.
That is our edge.
By The Numbers
LPs in the fund: 62
Investments as end of this quarter: 13 (vs. 12 in Q3)
Number of Deep Tech investments: 5
Number of Infra investments: 3
Number of Enterprise Software / AI: 5
% of fund deployed: 65% (vs. 59% in Q4)
1:1 founder discussions held: 120 (vs. 132 in Q4)
Due Diligences conducted: 11 (9% of companies screened)
% of the fund controlled by female LPs: 28% (diversity matters)
Expert Venture Partners: 6
Full-time talent at the fund: 3
Our sourcing funnel remains highly selective: out of 120 founders we personally spoke with, 11 made it to diligence, and only one earned an investment—reflecting our focus on numbers, rigour, and the search for the extraordinary.
Inside Hosted AI
AI workloads depend on GPUs. Those GPUs sit in data centers. The hyperscalers (AWS, Azure) have optimized theirs. So have Nvidia and Run.ai for enterprises. But hundreds of Tier 2 and Tier 3 service providers are sitting on idle GPU infrastructure—with no way to monetize it.
Hosted AI changes that.
It is a SaaS platform that enables service providers to offer GPU-as-a-Service. Think Kubernetes-style orchestration meets VMware-grade virtualization—purpose-built for GPUs. It enables secure multi-tenancy, dynamic allocation, and full-stack billing.
This is a pure software play—targeting a neglected but critical segment. The team has scaled platforms like Citrix, OnApp, and VMware. They already have relationships with 3,000+ service providers.
We made a deliberate exception to our self-imposed post-money cap—accepting a $20 million valuation for a 2% stake. We believe our ownership alone could return 4x the fund in a multi-billion-dollar outcome.
The market is large. The timing is right. The outcome could be massive.
Team
This quarter, we hosted an Agentic AI conference in Bangalore. It was well attended.
Anand (CMU professor, AI & Data Science) and Quentin (ex-Epic Games global head) joined us on stage.
Both are Venture Partners at Golden Sparrow. They work closely with our founders—from diligence to product decisions—bringing global perspective and deep domain expertise.
Quentin observed that as model costs drop 10x annually, traditional game studios will struggle to compete with user-generated content. Today, players render 2D dream games instantly. Tomorrow, it will be 3D. We are exploring investments in that direction.
We also welcomed Rahul Harikumar as our newest analyst. He followed every update and newsletter we wrote. He was convinced that working in a small Indian Deep Tech fund would meaningfully impact him—and our founders. We agreed. He is already picking great companies at the frontiers and sourcing overlooked teams.
India’s red hot market
India’s stock market has cooled. The Sensex is down 12% from its September 2024 peak. Over $15B in foreign capital has exited since January.
Retail frenzy has slowed after the regulator intervened in the overheated derivatives market—India accounted for 89% of global equity options volume last year. The correction was overdue.
GDP growth has slowed for three quarters and is forecast at 6.5% for 2025—short of the 8% needed to meet the 2047 target. Investment is uneven. Consumption is patchy. Export demand is soft
But fundamentals remain intact. The budget expanded startup funding, including a dedicated Deep Tech Fund.
India remains uniquely positioned amid global caution.
MIGA: Make India Great Again
Like a fox on shifting ground, India is recalibrating early for Trump’s return. At the heart of this pivot is MIGA, a linguistic and strategic echo of MAGA, deployed by Jaishankar, India’s sharp-tongued foreign minister. He openly mirrors Trump’s rhetoric, criticizing “free riders” and dismissing “tokenism”—echoes of America’s culture wars. Trump's indifference to minorities offers India political cover.
India continues to buy Russian oil and arms. At the same time, it is preparing to purchase more U.S. weapons. Trump calls India the “biggest tariff abuser.” A trade deal still appears within reach.
As the FT succinctly put it: “India’s boon in this age of fluid geopolitics is to be able to say to the West that it is not China—and to the rest of the world that it is not the West.”
India and the Tech Giants
Elon Musk’s cancelled 2024 trip turned into a headline-grabbing Modi meeting (with toddlers in tow). Starlink now seeks an operating license in India. To ease tensions with incumbent telecom giants, the government brokered a compromise. Reliance and Airtel quickly moved to become Starlink resellers and hedge their positions.
Meanwhile, OpenAI and Meta are actively courting Reliance:
OpenAI is considering a 75–85% price cut on ChatGPT in India.
Meta is pushing Llama-powered tools via WhatsApp, Instagram, and Facebook.
Jamnagar—home to the world’s largest oil refinery—may soon host one of the world’s largest AI data centers. India wants to power AI locally. This is no longer just about tech—it is geopolitics.
Indian Venture Capital
Q1 2025 will likely see VC investment hit $2 billion, a moderate dip from 2024.
But strong conviction deals continue:
Portl: $120M (fitness tech)
BluSmart: $70M (EV mobility)
Zolve: $50M (neobanking)
BatterySmart: $45M (battery swapping)
Capital remains available to focused teams building for the next decade. Upcoming IPOs from PhonePe and Zepto continue to show that the path to exits in India is both possible and happening.
We remain convinced that outsized outcomes come from the edges. That is where we will stay.
Thank you for being with us on this journey.
See you here next quarter.
Rishaad
