This follows a trend of venture capital funds mopping up larger corpuses amid frenetic deal making.
The fund has already surpassed Rs 1,000 crore owing to oversubscription from investors. It had announced its first close in September 2020.
“It has been a great year for venture capital firms. Not only have companies seen heightened investor interest, GPs (general partners) such as ours are also seeing top quartile limited partners backing new funds. We had to increase our fund size to accommodate the incoming investors,” Pranav Pai, founding partner, 3one4 Capital told ET. “We will exercise the green shoe option and further extend it and are likely to have a final close by January next year,” he added.
The Rs 750-crore fund came with a green shoe option of Rs 500 crore. The company is likely to extend that by a further Rs 250 crore to close at Rs 1,500 crore, Pai said.
3one4 has invested in companies such as Licious, Darwinbox, and Koo. It is expected to allocate more funds to back its winner portfolio companies with larger cheque sizes.
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“We may do more deals with larger cheque sizes and as we see our portfolio companies growing at a faster clip, we are putting aside more capital for follow-on rounds that these companies will raise in future,” he added.
Founded in 2015, the firm invests in Software as a Service and enterprise automation, direct-to-consumer products and services, digital media, fintech, and deep technology, with a focus on areas such as machine-driven actionable intelligence services for the enterprise, ambient intelligence technologies, ed-tech, logistics and distribution, consumer products and services, and health.
Launched in December 2019, Fund III is majority subscribed by Indian family offices, endowment funds and institutional investors. Some of the marquee new investors that have backed the fund include CDC Group Plc, the UK sovereign development finance institution; the Japan-India Fund-of-Funds – Nippon India Digital Innovation AIF (NIDIA); South Korean video gaming giant Krafton, Inc; prominent Indian endowments and foundations such as Catamaran and Premji Invest, and several others.
The fund also counts a majority of India’s top five largest banks as Limited Partners, alongside listed Indian corporations in manufacturing, insurance, and financial services, Pai said.
“Fund III has already completed investments in over 20 companies as of this quarter,” he said.
Some of these companies include Koo, Dozee, Exponent Energy, Breathe Well-being, Everstage, Ripplr, Hypto, WeRize, among others.
“These portfolio companies have already closed over 11 follow-on rounds at higher valuations since the fund’s entry from top-tier local and global VCs, PEs, and strategic investors. The fund has already deployed more than 25% of its committed capital,” he added.
In addition to the vintage funds, the firm also raised a specialist seed fund called Rising 1 and a special opportunities fund called Continuum 1. Both of these were closed in 2019.
This makes 3one4 one of the largest India-focused firms to have raised such large rupee denominated funds.
As domestic investors come of age, the pool of capital is getting bigger and competes with global funds that have rushed in to invest in the India growth story.
Funds such as IIFL Late Stage Fund, Edelweiss PE, Chiratae, A91, Stellaris among others have either raised new funds or are in the process of raising larger follow-on funds, taking a cue from the rush in liquidity.
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