New Delhi: 3one4Capital, a venture capital firm focused on investing in early-stage technology-driven startups, has announced the closure of its fourth fund, raising $200 million from domestic and international investors. With this, the firm has now crossed $750 million in assets under management. This achievement is noteworthy given the challenging funding environment and demonstrates the firm’s ability to attract institutional investors.
The closure of 3one4 Capital’s fourth fund is the third India-focused fund to announce its final close in the last two weeks, following Multiples Alternate Assets Management and Chiratae Ventures. The growing interest in India-focused funds indicates a maturing ecosystem and significant investor interest in the region.
The oversubscribed fund had to limit its size to $200 million to maintain its investment discipline. According to Pranav Pai, founding partner and chief investment officer at 3one4 Capital, “For us, to be a focused early-stage investor and maintain our performance levels, $200 million seems to be the optimal fund size.” This approach sets 3one4 Capital apart from its competitors, who are raising larger funds and writing bigger checks or investing for longer periods in successful portfolios.
The company also offers its limited partners the option of direct investment in its portfolio firms, allowing them to support investments longer through subsequent rounds.
3one4 Capital has already invested in five deals from its new fund, including Licious, Darwinbox, Open, BetterPlace, Jupiter, KukuFM, Koo, Dozee, and Tracxn. The firm will continue its early-stage strategy, focusing on sectors such as SaaS, consumer internet, fintech, and enterprise and SMB digitization while increasing investments in newer areas such as climate tech, digital health, and more. The investments will range from pre-seed to Series A, with cheques between $0.5 million and $5 million. The firm will also look at post-seed and pre-Series A funding rounds.
3one4 Capital’s previous funds have performed well, with a net internal rate of return (IRR) of 37% and 35%, respectively, making Rising I & Fund II (Scheme II) the top two among the best-performing India-focused VC funds among the vintage years, 2010-2018, according to Prequin’s report. The VC firm was founded by Pranav Pai and his brother Siddarth, who have raised six funds so far, managing a total of ₹3,710 crores ($510 million) of committed capital and over ₹6,000 crores ($750 million) in assets under management. Nruthya Madappa and Anurag Ramdasan are the other two partners in the firm.
3one4 Capital’s investors include mutual fund operators, banks, US university endowments, insurance companies, global sovereign funds, and global corporations, among others. Fund IV is made up of more than 90% institutional investors.
In conclusion, the successful closure of its fourth fund underscores 3one4 Capital’s expertise in early-stage venture capital investments and reflects the continued interest of domestic and international investors in India-focused funds. The firm’s approach of maintaining a smaller fund size to stay disciplined and offering its limited partners the option of direct investment sets it apart from its competitors. 3one4 Capital’s impressive track record and commitment to investing in new and emerging areas bode well for the success of its fourth fund.
