Inventus Capital hits the road to raise third VC fund
Photo Credit: Mukul Mudgal/VCCircle

India-focused early-stage investment firm Inventus Capital Partners is back on the road to raise its third venture capital fund, just a couple of years after raising its second fund, a regulatory filing with US SEC shows.

It joins a host of other VC firms that are in the process of raising their new funds. This list includes Kalaari Capital and IDG Ventures which are also looking for investors for their third fund.

Inventus, which floated a new fund back in 2011 to raise $100 million, had closed it in early 2014 with a marginal oversubscription, having garnered $106 million. This was just over twice the corpus under its maiden fund where it had scooped $50 million. However, the investible corpus was more due to a stronger greenback.

The VC firm has not indicated a target size for the proposed fund—Inventus Capital Partners Fund III. When contacted by VCCircle, Parag Dhol, managing director of Inventus Capital, declined to comment on the development.

But as per a report in The Economic Times, citing unnamed persons, it is eyeing around $150 million in its new outing.

Inventus typically leads the first institutional round in a startup chasing ventures in the digital services sector, particularly in consumer & business software and technology-enabled services. Its investment sweet spot is in the $1-5 million range.

Between 1993 and 2006, the firm has backed 65 US companies in addition to Indian companies, according to its website. Of the 91 companies, it has exited 51 companies with a 36% gross pooled internal rate of return with an average holding period of five years, it added.

Some of the portfolio companies of Inventus had been able to attract strategic interest from international players. It exited bus ticketing venture redBus when it was acquired by South African media conglomerate Naspers’ Indian arm ibiboGroup (MIH India). In 2011, another portfolio company, offshore developer Sierra Atlantic, got scooped up by Hitachi Consulting.

The VC firm invests in three-four companies each year and since January added three firms to its basket—Tricog Health Services Pvt Ltd, HealthifyMe Wellness Products and Services Pvt Ltd, and Knolskape Solutions Pvt Ltd. It also reinvested in Unbxd Software Pvt Ltd and exited Genwi, which was acquired by Persistent Systems Inc, according to VCCEdge, the data research platform of News Corp VCCircle.

Last year, it also exited its investment in Insta Health, which was acquired by Practo Technologies for $12 million. In the past, it invested in companies including eTechies, Savaari, Sokrati, TELiBrahma, Cbazaar, ViVu and Funds India, among others.

Other early-stage funds

Among its peer group where VC firms are looking at follow-on funds, Kalaari Capital had hit the road to raise $275 million through two new fund vehicles, last year. Early this year, IDG Ventures India has launched its third India-focused fund with a target corpus of $200 million.

Early stage venture investments have been on a decline in India since the beginning of this year but that has not impacted the fund raising activity. For instance, last month, early stage venture capital firm YourNest launched its second fund, YourNest India Fund II, with a target of raising Rs 300 crore.

Earlier in September, the founders of Mumbai-based co-working space provider and startup accelerator Z Nation Lab said it was planning to launch a seed-stage venture capital fund to back technology firms.

Last week, another early stage investor 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 is 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.

In January, early-stage venture capital firm Endiya Partners—floated by former managing partner of Ventureast Sateesh Andra along with Ramesh Byrapaneni and Abhishek Srivastava—had raised $15 million (Rs 100 crore) to mark the first close of its new fund.

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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