Iron Pillar raises $45 million add-on fund to back portfolio leaders

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Iron Pillar, a firm which invests in growth-stage startups, said on May 18 it raised an add-on fund of $45 million to back the best-performing companies in its portfolio.

Iron Pillar is a venture capital (VC) firm that invests between $7-15 million as the first cheque in Series B and C rounds of companies.

“We expect to deploy this fund by the end of the year. Despite the Covid-19 pandemic, we have seen some of our companies double their sales numbers in the last one and a half months and this capital will help them,” Anand Prasanna, managing partner, Iron Pillar, told Moneycontrol.

COVID-19 is the respiratory illness caused by the coronavirus.

Founded in 2017 Prasanna, a former Morgan Creek director, former Citigroup India investment banking head Sameer Nath and former DFJ India head Mohanjit Jolly, it raised its debut fund of $90 million in 2018 to invest in technology-led startups.

VCs are raising add-on funds so that when their portfolio firms raise large rounds, these early-backers are not left out and don't miss out on the upside because they have no more capital left to commit.

The fundraise also comes at a time when the venture capital industry, at large, is bracing for a slowdown in investments, exits and a period of crisis.

Some of this was already expected as high-profile startups, globally and in India, faced a reckoning since last year.

But the coronavirus pandemic made corrections in valuations and the slowdown much sharper.

Iron Pillar’s portfolio includes speech-recognition tech firm Uniphore, test-preparation startup Testbook, Vyome Therapeutics, which focuses on drug-resistant skin pathogens, jewellery-maker Bluestone and NowFloats that helps businesses with their online presence.

It has already seen an exit--somewhat early for a debut fund--when Reliance Industries Limited acquired NowFloats for $20 million in 2019.

Despite the pandemic, Prasanna said the firm was still evaluating new deals but whether they would finally invest was uncertain.

“We have been tracking some companies for years. But whether we will invest three months or even six months later is difficult to tell right now,” he said.