Early-stage venture capital firm Kae Capital on Thursday announced the final close of its third fund with a corpus of ₹767 crore (about $94 million), nearly double its $53 million second fund.
The third fund, which was launched last year with an initial target of $90 million, is backed by existing and new limited partners, such as international institutional investors like Old Mutual Wealth, Velo Partners, and Finex, as well as domestic backers HDFC Holdings and Small Industries Development Bank of India.
Infosys co-founder Kris Gopalakrishnan, Blackbuck’s co-founder Rajesh Yabaji, Nazara founder Nitish Mittersain, BookMyShow’s Ashish Hemrajani, Srikanth Velamakanni of Fractal Analytics, Jupiter’s chief executive Jitendra Gupta and MakeMyTrip founder Deep Kalra are also among the backers.
The family offices of Infosys’ Gopalakrishnan, Allcargo’s chairman Shashi Kiran Shetty, Hero Enterprise’s Sunil Kant Munjal, Hemendra Kothari of DSP Investment Managers, and Apax India head Shashank Singh as well as SRF Family Office and Taparia Family Office also backed the fund.
The third fund, which was oversubscribed, will primarily invest in fintech, SaaS (software-as-a-service), consumer tech, B2B (business-to-business) commerce, healthtech, direct-to-consumer (B2C) brands and gaming startups, Kae Capital founder Sasha Mirchandani said in an interview.
The Mumbai-based firm plans to invest $2-$3 million in pre-Seed to pre-Series A rounds. It plans to double the investments in Series A and B rounds and may invest up to $10 million in a company.
It has so far made seven investments from the third fund launched last year, with five companies successfully raising funds in follow-on rounds. However, Mirchandani said the firm didn’t invest much in 2021 when investors were giving into the fear of missing out on deals.
Kae Capital was founded in 2012 by Mirchandani, who is one of India’s earliest startup investors, and is also founder of the Mumbai Angels network of angel investors. Winners of Kae Capital’s first fund of $25 million are online pharmacy 1mg and omnichannel shopping startup Fynd. From the second fund, it invested in Zetwerk. “We’re at 5x net returns in first and second funds,” said Mirchandani when asked how the first two funds have performed so far.
“The DPI (distributed to paid-in capital) for Fund II is around 80% and we will hit 1x DPI for Fund 1 by March 2023,” he added.
The strategy helped it save funds to invest in 2022 and 2023 when valuations have become modest. Mirchandani also pointed out that investors are now getting more time for due diligence.
Kae Capital has invested in 79 startups, and claims a portfolio enterprise valuation of $8.52 billion. To date, the investor has made 14 exits.