3One4 Capital Raises $200 Million For Its Fourth Venture Capital Fund

At a time when the funding winter is intensifying, the continued attraction of India-focused funds is a sign of a maturing ecosystem and significant investor interest in the sector. This is the third India-focused fund in the last fortnight to announce its final closure after private equity investors Multiples Alternate Assets Management and Chirate Ventures.

The fund, which was oversubscribed, had to limit its size to $200 million, a goal for management to adhere to, said Pranav Pai, founding partner and chief investment officer at 3one4 Capital. “For us, being a focused early-stage investor and maintaining our level of performance, $200 million seems to be the optimal fund size,” Pai said.

Its supporters include banks, mutual fund operators, US university endowments, global sovereign funds, global corporations and insurance companies. The firm said that Fund IV is made up of more than 90% institutional investors. While the capital split is equal between rupee and dollar investments, this will be the firm’s first fund in GIFT IFSC. It will also be its first offshore vehicle.

3one4’s approach is unlike that of most of its competitors, which is raising big money and writing bigger checks or investing in successful portfolios for longer periods of time.

“We give our LPs the option to invest directly in our portfolio firms, which allows them to support our investments over the long term through their subsequent rounds,” Pai said.

The VC firm was founded by Pai and his brother Siddharth, which has raised six funds so far. Overall, the firm will manage 3,710 crore ($510 million) committed capital and more 6,000 crore ($750 million) in assets under management. Anurag Ramdasan and Nritya Madappa are the other two partners in the firm.

Apart from Licious, Darwinbox, Open, BetterPlace, Jupiter, KukuFM, Koo, Dozee and Trackxn, the firm has already started deployments from its new fund. Ramadasan said it has invested in five deals.

According to him, the firm will continue its early-stage strategy focusing on areas such as consumer internet, SaaS, fintech, and enterprise and SMB digitization, while increasing investment in new areas such as digital health, climate tech and others.

Its investments will range from Pre-Seed to Series A, with checks ranging between $0.5 million and $5 million. Ramadasan said the firm would also look at post-seed and pre-Series A funding rounds.

With a net internal rate of return, or IRR, of 37% and 35%, 3one4 Capital’s Rising I and Fund II (Scheme II) are among the top best-performing India-focused VC funds among vintage years, according to Prequin’s report. There are two. , 2010- 2018.

Even as the investment ecosystem has slowed down due to a global liquidity crunch, India-focused funds continue to gain traction among risk averse investors. Early stage investor Chirate announces its final closing First growth fund of 1001 crores last week. Multiples Alternate Asset Management said it raised $650 million for the first close of its new fund. This indicates increasing investor interest in fund managers with a proven track record.