A91 Partners raises $665 million for its third India fund

A91 Partners team

A91 Partners, a homegrown venture capital fund, announced on April 22 that it has raised $665 million (over Rs 5,600 crore) for its latest fund, as the investor looks to back more startups in India’s fast-growing ecosystem. This marks A91’s third fund since its founding in 2018.

With the latest raise, A91 joins a growing list of venture capital firms which have raised a new fund to strengthen their conviction around the world’s third-largest startup ecosystem. More recently, Accel, one of the most prolific investment firms in the world, raised a record $650 million (around Rs 5,500 crore) for its eighth India fund.

While some like Accel have kept the size of their fund the same as earlier, there are also VC funds like Peak XV Partners which have reduced their fund size. A91 however is on the other end of the spectrum since it has marginally increased the size of its fund from earlier.

The VC firm had raised $350 million in 2019 for its first fund, followed by a second fund of $550 million in 2021.

“We started A91 in 2018 with the following beliefs - patient capital will play an important role in accelerating value creation in Indian businesses across sectors. We also believed in the opportunity to create a world-class Indian investment firm - for founders who are aiming to build large enduring businesses from India,” the firm said in a post on LinkedIn.

“We are incredibly grateful to both our investors and the founders that have partnered with us and continue to inspire and educate us,” the post added.

The VC fund, which typically writes cheques worth $20-50 million for founders, has raised money from IFC, an arm of the World Bank and other limited partners (LPs) for this $665 million fund. IFC invested around $35 million in A91’s latest fund and has been an existing investor, having put in around $25 million in each of its previous funds.

LPs, or fund sponsors, are the ones that invest in VC funds. VC firms then have fund managers who invest in companies and hope to make outsized returns.

A91 has so far invested in Atomberg, Rare Rabbit, Paper Boat, Aye Finance, Ummeed Housing Finance, among others.

“While it is still early in our journey at A91, we aspire to be enduring ourselves, and be long-term partners to founders and Limited Partners,” the firm’s social media post said.

Fundraising spree

A91 Partners, Accel other VC firms are on a fundraising spree after a break of over a year. 

In the past months, Silicon Valley-based Bessemer Venture Partners, launched its second India-focused fund with a corpus of $350 million, over 50 percent higher than its first India fund of $220 million launched in 2021.

Similarly, domestic early-stage investment firms like Cornerstone VC and Prime Venture Partners have also raised large funds, at $200 million and $100 million respectively.

Meanwhile, other smaller VC firms like Eximius Ventures and SamVed VC have managed to close smaller funds of $30-50 million since the start of this year.

However, the back-to-back fundraises will only add to the dry powder. Fundraising fell around 35 percent to just $2.7 billion in 2024, as abundant dry powder reserves among top investors curtailed overall activity, as per a recent report by Bain & Company and Indian Venture and Alternate Capital Association (IVCA). In comparison, VCs raised $4 billion in 2023 and a record $8 billion in 2022.