World Bank's private investment arm International Finance Corporation (IFC) has proposed to invest $20 million (around Rs 136 crore) in IDG Ventures India's third India-focused fund, it said in a statement.
The third fund, which is registered as IDG Ventures India Fund III LLC with the US Securities and Exchange Commission, has a target corpus of $200 million.
The fund seeks to focus primarily on Series A and B investments, it said. It will look to invest in technology and technology-enabled companies in India across consumer internet, software, health-tech and fin-tech sectors, IFC said.
IFC that has an active direct private equity style investment practice in India, also lends to firms in the country. It also has an active limited partner or LP portfolio in India where it backs PE and VC funds focused on India.
Last year, IFC proposed to put in $40.6 million (Rs 270 crore) in Indian private equity firm Multiples Alternate Asset Management Pvt Ltd's second fund. The PE firm since then went on to make the final close of the fund. IFC’s investment in Multiples' fund would expand its LP exposure to the country.
Nikunj Jinsi, IFC's global head of venture capital, told VCCircle last year that it made five VC fund investments in the year ended 30 June 2016 and intended to do five globally in the current financial year.
IDG Ventures India
IDG's new fund is the successor to IDG Ventures Fund II, which was floated in 2013 to raise $175 million. In 2007, IDG Ventures Fund I had raised$150 million.
The second fund, however, didn’t manage to raise the targeted amount and ended with Rs 600 crore (around $100 million then) in November 2014.
IDG Ventures India typically invests between $0.5 million and $10 million in startups. Its portfolio includes companies such as Lenskart, Zivame, Aasaanjobs, Firstcry.com, Forus Health, Perfint Healthcare, SilverPush, SuperProfs, Uniphore, Vserv and Xpressbees.
IDG Ventures India is part of IDG Ventures, a global network of technology funds with about $4 billion under management. The Indian VC firm was floated by Manik Arora, Sudhir Sethi and TC Meenakshisundaram nine years ago. Arora quit the firm in 2015.
Growing VC funds in India
The venture fund's fundraising comes at a time when several other venture capital firms in the country have also mobilised funds or are in the process of doing so.
Most recently, early-stage venture capital firm Endiya Partners made the final close of its debut fund at Rs 175 crore (around $26 million).
In November last year, Infosys Ltd said it will invest in the maiden fund of home-grown early-stage venture capital firm Stellaris Venture Partners, which was launched by three former executives at Helion Venture Partners.
In September last year, early stage venture capital firm YourNest launched its second fund, YourNest India Fund II, with a target of raising Rs 300 crore.
Besides, the founders of Mumbai-based co-working space provider and startup accelerator Z Nation Lab said last year it was planning to launch a seed-stage venture capital fund to back technology firms.
Ventureast Fund Advisors India Ltd had announced the first close of its sixth fund—Ventureast Procative Fund II (VPF2)—at $83 million en route to a target corpus of $150 million in total.
Unitus Seed Fund was also looking to mark the first close of its $50 million second fund by the end of 2016.
In August, LetsVenture founder Manish Singhal floated an early stage venture fund called Pi Ventures with entrepreneur Umakant Soni.
Inventus Capital Partners, Kalaari Capital and IDG Ventures are also looking for investors for their new funds.
These VC firms are looking to replicate the success of larger peers such as Sequoia Capital, Nexus Venture Partners, SAIF Partners and Accel Partners that raised new funds for India in the last two years.
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