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3one4 Capital to raise $100 million third VC fund

3one4, an early-stage venture fund is managed by Pranav Pai and Siddharth Pai, sons of former Infosys senior executive TV Mohandas Pai.

September 03, 2020 / 12:03 PM IST

Early-stage venture fund 3one4 Capital September 2 said it is raising its third and largest fund so far worth $100 million to invest in technology-led startups.

The fund is managed by Pranav Pai and Siddharth Pai, sons of former Infosys senior executive TV Mohandas Pai.

3one4 has already raised about 40 percent of the fund, marking its first close - which allows it to start deploying the money, while still raising the rest of the fund. About 30-40 percent of the fund will have new investors- limited partners, while the rest will be from existing LPs.

“A bigger fund gives us the option to be more flexible with cheque sizes, support companies longer, and look at new sectors,” said Pranav Pai, founding partner, 3one4, on a call with Moneycontrol.

It aims to close this fund in the next 12-18 months.

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3one4’s current portfolio includes meat delivery startup Licious, social media app Mitron, software startup Darwinbox, neobanks Jupiter and Open, and Yulu Bikes among others.

3one4 has been able to raise a new fund during the coronavirus pandemic because many of its portfolio companies- mainly online services, have benefitted the companies by boosting digital consumption.

The fund’s backers include Emory Investment Management, a large US endowment that manages the assets of Emory University, Emory Healthcare and The Carter Center; Sojitz - a leading Japanese corporation, Catamaran Ventures- former Infosys CEO Narayana Murthy’s private investment arm, and Infina - a private investment company owned by the Kotak family, besides other Indian institutions and family offices.

3one4 raised its debut fund of Rs 100 crore in 2016, followed by a Rs 250 crore second fund in 2017. Last year, it also raised a Rs 400 crore opportunity fund- meant to back the best performing portfolio companies, and not new deals.

Like most VCs who raise successively larger funds, this lends to a strategy of picking fewer companies than before, but writing larger cheques.

From the new fund, 3one4 also wants to invest in agri-tech and health startups- both sectors where it has not been very active before.

“We have been a little slow with agri, but the last few years we have consistently seen a few decently sized companies get created. On healthcare, we have been especially cautious because it is more regulated, and because lives are at stake, so it needs additional caution. But we think this sector is coming of age,” Pai said.

3one4’s fundraise also indicates a relatively positive investing environment, after the initial months of doom and gloom for the startup ecosystem- which was handed a harsh reality check by the pandemic, leading to layoffs, deals called off, and sharp falls in revenue.

Since then, Sequoia India has closed $1.35 billion in funds to be deployed in the next two years, while Lightspeed India has also raised a $275 million fund, its third and largest so far- indicating better sentiment.
M. Sriram
first published: Sep 2, 2020 02:07 pm

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