Fireside Ventures, a homegrown consumer-focused VC firm, is in the advanced stages of raising $230 million (around Rs 2,000 crore) for its fourth fund (Fund IV), people aware of the developments told Moneycontrol, unchanged from the amount it raised for its third fund in 2022.
“The work on the new fund has begun and Fireside is already meeting with its current limited partners (LPs) and other potential LPs,” one of the sources cited above said.
LPs or fund sponsors are the investors who put in money into venture capital (VC) funds.
So far, Fireside has largely raised money from domestic LPs but is now looking to have more foreign investors who are looking to have exposure to India’s thriving startup ecosystem, a second person said. It will also help Fireside brand to grow, the source said.
Fireside Ventures did not respond to Moneycontrol’s queries.
Fireside Ventures has also applied to register its fourth fund with the Securities and Exchange Board of India (SEBI), regulatory updates show. It is yet to decide when it will announce its first close of the fund.
This will be Fireside’s largest fund yet. Founded in 2017, Fireside Ventures raised around $52 million for its first fund in 2018 then increased the corpus to $118 million in 2021 for its next fund.
The Bengaluru-based fund went on to raise $225 million for its third fund in 2022. The amount is largely similar in its fourth fund, sources said.
Since its inception, Fireside Ventures has backed several consumer firms such as Honasa Consumer, Boat, Yoga Bar, The Sleep Company and several others.
In total, it has backed 53 brands and manages assets worth over Rs 3,000 crore, the company's website says.
VCs on a fundraising spree
Fireside Ventures is raising a new fund at a time when a string of venture capital firms are going on a fundraising spree.
Since the beginning of this year, A91 Partners has raised $665 million in its third fund, Accel secured $650 million for its eighth India fund and Bessemer Venture Partners raised $350 million for its second India fund, among others.
While different VC firms have raised new funds, the strategy followed has been different. VCs like Bessemer and A91 increased the size of their latest funds from the previous ones. Accel, Fireside and others have raised amounts similar to their previous funds.
“The larger the fund, the more the pressure to deploy capital and then the return expectations also increase – hence we’ll see a lot of VCs opting to keep their fund sizes unchanged from last time,” one of the sources said.
Typically, a $300 million fund will have to 5X the invested amount — which translates to $1.5 billion in total returns — to qualify as a top tier fund. “And making that kind of money is not easy, so it's best to be more realistic with the fund sizes,” the source cited above said.
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