Consumer-focussed early-stage venture capital firm Sauce.VC has hit the final close of its Sauce Continuity Fund, a top company executive told VCCircle.
The category-II alternative investment fund, which initially had a target of Rs 250 crore (around $30.2 million as per current rates), was oversubscribed and made the final close at Rs 263 crore, said Manu Chandra, founder and managing partner of Sauce.VC.
The investor base for this fund is almost entirely domestic and was largely raised directly by the team without the need for third-party distribution. The fund also saw many repeat LPs, VCCircle has learned. The fund's LP base includes family offices and institutions including insurance companies, fund of funds, etc.
"LPs have backed us a third time in less than five years to invest in the Indian domestic consumption thesis. We realise the importance of delivering on this trust in the same manner as our first two seed funds have been delivering thus far," Chandra further said.
The Sauce Continuity Fund invests primary capital in the Series A to Series C rounds of select winners from Sauce’s first two seed investment vehicles.
The fund wants to invest in seven to eight companies, with a first cheque of around Rs 20 crore. It will participate in follow-on rounds with a cheque size of around Rs 15-20 crore.
Sauce.VC aims to invest as a non-lead investor in winners from the larger seed portfolios of the first two funds. It invests in companies that have an ARR of around Rs 80-100 crore, with a growth rate of 100% year-on-year.
The potential candidates should also have strong profitability metrics along with the capability of securing equity capital from reputable institutions.
Over the last few months, the fund has already invested in five companies, including men’s innerwear brand XYXX; clean label food The Whole Truth Foods; travel lifestyle accessories brand Mokobara; personal care brands Innovist and petcare platform Supertails.
The fund participated in some of its portfolio firms’ funding rounds led by marquee institutions such as Peak XV, Fireside Ventures and Amazon Smbhav Fund.
The firm also sees follow-on investment opportunities from this latest vehicle, in at least three more firms: oral care brand Perfora, ice cream bran Hocco and energy drink Rockit.
Sauce invests in new-age disruptive consumer brands and platforms at a pre-revenue or idea stage. To date, it has invested in 21 companies from its two separate funds that were set up in 2019 and 2021.
It continues to offer funds with a smaller corpus despite many peers raising much larger funds. "A smaller fund strategy allows for more practical exits without deployment pressure given the depth of secondaries that we see in India today. Also, many brands exit to strategics even at a small to mid-scale, this allows us to participate profitably in such investment stories as well.", added Yash Dholakia, director at Sauce.
