Iron Pillar tops up debut fund to help portfolio firms tide over virus crisis
Photo Credit: VCCircle

Venture capital firm Iron Pillar, which provides growth capital to mid-stage technology companies in India, said on Monday it has topped up its first fund with $45 million (Rs 338 crore).

Anand Prasanna, managing partner at Iron Pillar, said in a statement that the top-up fund is a proactive step to provide additional capital to well-performing companies from its debut fund in the times of the coronavirus crisis.

The coronavirus pandemic has compelled governments across the world to impose lockdowns to contain its spread. India on Sunday extended its lockdown for a third time until May 31 as the number of people infected with the coronavirus races toward 100,000. But the lockdown is having a disastrous impact on businesses including startups that have been forced to lay off staff or cut salaries and other expenses.

Prasanna said the current crisis and its second-order effects have reduced the amount of growth capital available for tech companies in India. One way to deal with the crisis is for existing investors to step up with creative structures and provide access to capital for the next 24 months, he added.

With the top-up fund, Iron Pillar has added three global institutions to its base of Limited Partners, or investors. These include alternative assets investor 57 Stars LLC and a large European family office, the VC firm said, without elaborating.

Mohanjit Jolly, partner at Iron Pillar, said the investment from the new LPs is a validation for the strength of the VC firm's portfolio, credentials of its team and investment strategy.

Iron Pillar, one of the few mid-stage technology investors in India, had marked the final close of its debut fund at $90 million in October 2018.

The fund invested in eight companies including online fish and meat seller Freshtohome and artificial intelligence startup Uniphore. Earlier this year, Iron Pillar led a Series B funding round in ed-tech startup Testbook.

The VC firm has exited software-as-a-service company Now Floats, which was acquired by Reliance Jio in December 2019.

Top-up funds

It is not uncommon for venture capital firms to raise a top-up fund to back their existing portfolio companies.

In February, Blume Ventures marked the final close of a so-called opportunity fund at $41 million along with the final close of its main third fund at $102 million.

Blume's opportunity fund is being used to invest in Series B, C and D rounds of its portfolio companies that are doing well from its previous funds.

In December last year, tech-focused VC firm 3one4 Capital hit the final close of its opportunities fund with oversubscription.

Last year, VCCircle reported that India Quotient was also raising an opportunities fund to make additional investments in the best-performing companies across its three funds.

In December 2016, venture capital firm Lightbox had raised an “expansion fund” of $54 million to invest more in existing portfolio companies.

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