● Fund III is the third early-stage VC fund from 3one4 Capital and the continuation of its banner strategy
● Successive raise since its last fund close eight months ago in December 2019
● 40% of the target corpus already committed from returning and new LPs
● Fifth overall fund launched by 3one4 Capital
Bengaluru, NFAPost: 3one4 Capital, an early-stage venture capital firm, announced the first close of Fund III, its third early-stage VC fund. This fund is the continuation of its banner strategy that invests in early-stage tech startups in India. Fund III will increase 3one4 Capital’s capital under management to over Rs 1,550 crore ($210 million).
The fund currently has subscribed more than 40% of its targeted corpus of $100 million with commitments from new and existing investors. Significantly, Fund III has been launched within three quarters from its last fund’s closure in December 2019.
In the current volatile market with subdued investment sentiment, the firm, founded by Pranav Pai & Siddarth Pai, has been able to attract top-tier global and Indian investors as Limited Partners (LPs). These investors include family offices, endowments, foundations, as well as corporate and financial institutional investors. The successive fundraise is a testimony to the team’s consistent track record in the Indian early-stage ecosystem.
Early-stage startups
The deployment of Fund III will continue the firm’s core strategy of building portfolios of 25-30 early-stage startups in each fund. The new vehicle’s focus areas include a range of themes such as SaaS and enterprise automation, direct-to-consumer, media & content, FinTech, and deep technology.
Within these themes, the fund will cover sectors such as health, machine-driven intelligent services, ed-tech, agri-tech, logistics and distribution, food-tech, mobility, Indic language-focused applications, and more. Fund III will offer ticket sizes between $500 K to $4 million and will support an active follow-on strategy to back its investments into later stages.
On the launch, 3one4 Capital Managing Partner Pranav Pai said 3one4 Capital objective is to work with Indian entrepreneurs and help build transformative companies.
“Our investor base now combines an intellectually-diverse and globally-positioned pool of resources that provide a consistent competitive edge to the firm and its portfolio companies. By deepening our access to strategic corporations and investors, we can now direct more meaningful capital through the firm’s bottoms-up selection routines to discover the next set of generational tech companies from India,” said 3one4 Capital Managing Partner Pranav Pai.
Disruptive business
3one4 Capital Managing Partner Siddarth Pai said the current paradigm shift has demanded the acceleration of disruptive business models and a rebalancing of the early-stage investment lens.
“With this new fund, 3one4 Capital is purpose-built to be deeply involved across the lifecycle of the next innovation engines from India. Our deep involvement model is designed to help founders optimize for sustainable growth by serving as a force multiplier on the path towards defensible long-term value creation,” said 3one4 Capital Managing Partner Siddarth Pai.
The firm has four prior funds (including a dedicated seed fund, Rising I, and a dedicated opportunity fund, Continuum I) through which it currently has Rs 800 crore ($110 million) of capital under management. 3one4’s investments include Licious, BetterPlace, Open, Bugworks, YourStory, DarwinBox, Pocket Aces, Faircent, Begin, LoanTap, Jupiter, Yulu, and Tracxn.
The firm has backed some of India’s fastest-growing startups in its focus areas and the portfolio has yielded remarkable appreciation across vintages3one4 Capital’s portfolio companies have cumulatively raised over Rs 2400 crore in follow-on funding.
Significantly, 3one4 Capital is the first approved Venture Capital signatory of the Principles for Responsible Investment (PRI) from India and the fifth overall investment firm approved from India. The fund is committed to partnering with the next set of generational innovation engines out of India that will help set new standards for inclusive value creation and sustainable growth.
Investment decision
The firm is taking a proactive stance on incorporating and improving the environmental, social, and governance (ESG) factors into investment and ownership decisions. It will continue to remain meaningfully involved and engaged with the international network of signatories and be an active participant in policy and ecosystem development of ESG in India.
3one4 Capital is an early-stage venture capital fund based in Bangalore, India. The firm works in select market categories and in the intersection of adjacencies that are large, growing, and ready for unique products and services. The themes pursued are SaaS and Enterprise Automation, Direct-to-Consumer, Media & Content, FinTech, and Deep Technology, with a focus on sectors that include machine-driven actionable intelligence services for the enterprise, ambient intelligence technologies, edtech, logistics and distribution, agri-tech, consumer products and services, and health.
3one4’s investments are biased towards companies exploiting technology to create, grow, or dominate large markets in India. The fund also invests a portion of its capital in US-focused companies that have feedforward effects into the themes being pursued in India.
Through a deep involvement strategy, the fund works with founding teams and subject-matter experts to prioritize and strategize for product-market fit, and then optimize for defensibility and growth in revenue and impact. With a focus on margins and on delivering uncompromised end-user experiences, the fund aims to reduce risk, detect new growth opportunities, and return rewarding outcomes to all the stakeholders involved.
