Sixth Sense Ventures, founded by former IDFC Securities executive Nikhil Vora, is in talks to raise a Rs 1,500 crore ($200 million) venture capital fund, more than it had planned to, led by the funding frenzy for startups, sources said.
Sixth Sense plans to close the fund, its third, in the next few months, and invest in fast-growing consumer companies. Unlike typical venture funds, Sixth Sense does not stick only to early-stage (Seed, Series A) or technology-led firms, also investing in offline-led brands or areas closer to private equity.
For instance, its portfolio includes craft beer brand Bira and healthy snacks brand Open Secret, which have other VC investors, as well as asset pooling firm LEAP India and gaming centre Smaaash, which are closer to private equity investments.
The fund’s backers include Indian high net-worth individuals and institutions, and most, if not all of the fund has been raised from domestic investors, said a person aware of the matter.
Sixth Sense, founded by Vora and his IDFC colleague Japan Vyas, raised its debut fund of Rs 118 crore in 2016, followed by a Rs 515 crore fund in 2018. Vyas left the firm in 2018 to launch his own consumer-focused VC fund, Roots Ventures.
Vora did not respond to detailed mails seeking comment.
In its first fund, Sixth Sense is sitting on returns of 2.5 times the invested capital, while its second fund has 1.9 times the invested capital, as per its website. Its funds are relatively young and could see more portfolio markups — companies raising money at a higher valuation — making its fund outcomes even better, people tracking the space said.
Vora recently said in a LinkedIn post that both of Sixth Sense's funds are among India's top performing funds from 2010-18, citing numbers from financial data platform Preqin.
“Interest from Limited Partners (LPs, the people who invest in funds) has been unprecedented. In a normal market they may have raised say, Rs 800-1,000 crore. But domestic investors are unusually aggressive, and Nikhil (Vora) has shown the ability to pick interesting spaces and founders,” one person added.
Boom time
India is witnessing an unprecedented startup and funding boom, in sharp contrast to the pandemic-induced blows last year. The pandemic has, however, accelerated internet usage and brought many more users to the fore, investors and entrepreneurs say. This has led to more venture capitalists chasing entrepreneurs than ever before, even as China — seen as a competing market to India by investors — is cracking down on its technology companies.
Local fund managers are raising larger funds, almost homing in on well-heeled foreign funds with an India presence. The CapTable reported on July 6 that funds floated by Edelweiss, Kotak, IIFL and others are on track to raise over Rs 10,000 crore this year.
Many of these names have traditionally been associated with private equity, real estate and the offline economy. They have been taking stakes in internet and new-age companies driven by their growth, scale and most importantly, ability to list on stock exchanges, as illustrated by Zomato, Policybazaar, Nykaa, et al.
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