Around 50% of the capital in the new fund has come from Indian banks and mutual funds, said Pranav Pai, founding partner at 3one4 Capital. Rest of the limited partners (LP) —who invest in venture funds — are investors such as US university endowments, global sovereign funds, global corporations and insurance companies along with Indian firms as well as large family officers. As much as 90% of the fund was raised from institutional investors, Pai said in an interaction with ET.
The company will formally close the fund by the end of the ongoing quarter, even as it has invested in five new startups from the latest flagship Fund IV. The Bengaluru-based investor has had three flagship funds, along with two opportunities funds.
“We launched the process for Fund IV in January and within two-and-a-half months, we had a commitment of $250 million – which is more than our last fund. Given our approach and the performance in the early-stage space and the changes we are seeing in the ecosystem, we took the decision to keep it a $200 million fund,” said Pai on the new fund. Earlier, 3one4 Capital had planned a $150 million corpus for its third fund, but increased it to $200 million as its final size.
“There are new institutional LPs that have come in this fund,” said Pai, whose fund is also an investor in firms like social media startup Koo and fintech WeRize. He did not name the new LPs but some of its returning LPs include Premji Invest, South Korea’s gaming major Krafton Inc and UK’s CDC group.
Besides Pranav Pai, his brother Siddarth Pai, Anurag Ramdasan and Nruthya Madappa are partners at the fund.
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Ramdasan said the firm has capital in reserves from Fund III for follow-on investments in existing firms, but new investments will be from the new fund.“Deployment has not been a challenge. We see about 7,000 firms and invest in 8-10 firms typically. In 2022, which was again a slow year for VCs, we still did eight-odd deals. We are still able to deploy enough capital. With the new fund, two-three investments are already in the pipeline,” Ramdasan said, while referring to the current slowdown in deal activity across stages. He expects the new fund to invest in around 30 or more firms over a period of time.
3one4 Capital invests between $0.5 million and $5-6 million. Its median cheque size is about $1.5-3 million.
“We may raise another opportunities fund (follow-on fund) for Fund IV as well, but that depends on if we have a batch of equally winning firms,” Pranav Pai said.
3one4 Capital’s new fund comes at a time when those like Sequoia Capital India, Lightspeed Venture Partners and Accel have already raised large funds though last year and are sitting on a significant amount of undeployed money. Last week, venture fund Chiratae Ventures announced the final close of its first growth fund at a little over $112 million.
3One4 Capital now has about $750 million of assets under management and its portfolio firms cumulatively have a valuation of around $7.5 billion.
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