Early-stage investment firm 3one4 Capital has launched its latest fund – a $100 million fund-III, just nine months after it announced the final close of two funds – a Rs 400 crore Opportunities fund and a Rs 45 crore seed-stage fund, and almost doubling its assets under management in the process.
In December, ET was the first to report that 3one4 Capital, which is operated and managed by Pranav Pai and Siddarth Pai, the two sons of former Infosys senior executive TV Mohandas Pai, had made the final close of its Continuum Fund, a buildout fund that would focus on investing in a curated selection of the firm’s portfolio, participating in their growth-stage rounds, primarily Series B onwards, and investing $3-5 million in the companies.
“Given that we have a fantastic batch of companies from the first two funds,the Opportunities Fund followed that very naturally. There was no conflict. But we also need to get back to doing or backing new companies, something that has to happen for the next 4-5 years. Fund-III is a spiritual successor to the first two funds, doing what we do best – and good companies at an early-stage, covering seed to Series A,” Pranav Pai , founding partner at 3one4 Capital, told ET in an exclusive chat.
Fund-III is a Sebi-registered Category-I venture capital fund that has been backed by a significant number of investors that have also backed 3one4 Capital’s earlier investment vehicles. According to Pai, a majority of the Limited Partners in Fund-III are of Indian origin. For its Continuum Fund, 3one4 Capital had roped in Emory Investment Management — the $7 billion US endowment that manages the assets of Emory University, Emory Healthcare, and the Carter Center — as one of its anchor investors.
“We should be backing more companies, and could end up with 25 companies at least with Fund-III. Global LPs now have no problems coming into Indian funds., given the easing of regulations,” Pai said, without disclosing the names of the investors in Fund-III.
The firm, which has over 50 companies in its portfolio, has made the first close of the new fund at $40 million, and will now manage assets of about Rs 1,550 crore, almost double of what it had a year ago. The investment theme for the new fund will be a continuation from its earlier funds, and which includes placing bets in sectors such as SaaS and enterprise automation, direct-to-consumer, media and content, fintech, and deep technology among others.
“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 optimise for sustainable growth by serving as a force multiplier on the path towards defensible long-term value creation,” Siddarth Pai, founding partner at 3one4 Capital, said.
“We do not have any Chinese affiliates as of now, and nor do we intend to actually change this anytime in the future. We have had opportunities in the past. But It’s also very important for Indian funds to be aligned and aware of the greater macroeconomic implications,” he added.
Prior to launching its latest fund, 3one4 Capital had launched four funds, all of which have been oversubscribed. Its first fund, launched in 2016, closed at Rs 100 crore, while it launched its second fund in 2017, with a target of Rs 150 crore, finally closing at Rs 250 crore.
The Bengaluru-based firm counts the likes of consumer product company Licious, mobility startup Yulu, new-age banking startup Jupiter and enterprise HR software solutions company Darwinbox among its portfolio. It has had three exits till date – Jigsaw Academy, Ressy and JustDoc – all of which were acquired.