Early stage startup investor 3one4 Capital has raised Rs1,000 crore for its third fund, surpassing its initial target of Rs750 crore, led by strong demand from domestic and international institutional investors, as the Indian start-up ecosystem becomes increasingly attractive for such investors.
The venture capital firm had started raising its third flagship fund in 2020. It has now raised five funds since its inception in 2016, including three flagship funds and two follow-on funds. The investment firm was set up by Pranav and Siddarth Pai. It has backed startups such as Licious, Loantap, Koo, and Darwinbox.
New incoming investors in the third fund include CDC Group Plc, the UK sovereign development finance institution, the Japan-India Fund-of-Funds - Nippon India Digital Innovation AIF (NIDIA); South Korean video gaming giant KRAFTON, Inc and prominent Indian endowments and foundations such as Catamaran and Premji Invest. The fund has also raised capital from a few large domestic banks as well as Indian companies from manufacturing, insurance, and financial services sectors.
“This is a combination of performance and the efforts that we have taken on the governance front and obviously the macro environment has been positive. Our startups have become larger, we have had our first unicorn and we'll have more unicorns next year. On the governance front, we are now the first approved UN PRI signatory from India,” said Pranav Pai, managing partner at 3one4 Capital.
“What has changed this year obviously is that we have a record surge of liquidity, we have a record surge of VC investments into India and we have a record allocation of global pools of capital into the India strategy. So all this has meant the Indian VC firms are now in demand,” he added.
The deployment of Fund III will continue the firm’s core strategy of building portfolios of 25-30 early-stage startups in each fund. The new vehicle’s focus areas include a range of themes such as SaaS and Enterprise Automation, FinTech, Direct-to-Consumer, Digital Media, and Deep Technology. Within these themes, the fund will cover sectors such as digital health, machine-driven intelligent services, electric vehicle mobility, edtech, agritech, logistics and distribution, food-tech, climate tech, Indic language-focused applications, and more. Fund III will offer ticket sizes between $500 K to $4 million and will support an active follow-on strategy to back its investments into later stages
Fund III has already completed investments in over 20 companies as of this quarter, with startups such as Koo, Dozee, Exponent Energy, Breathe Well-being, Everstage, Ripplr, Hypto, WeRize, and more. These portfolio companies have already closed over 11 follow-on rounds at higher valuations since the fund’s entry from top-tier local and global VCs, PEs, and strategic investors. The fund has already deployed over 25% of its committed capital.