IDG Ventures India, the India focused branch of global venture capital firm IDG venture firms, has to raised commitments of around $150 million (Rs 1,000 crore) from investors in what promises to be its largest fund for the country yet.
With this, the company has been brought closer to the goal of realizing its third, $200 million fund. With $50 million already in the kitty, the firm expects to be able to complete the fundraising for IDG Ventures India Fund III, by the year-end.
Meanwhile, with a fund double the size of the it’s previous two pools, IDG will also be looking to invest in later rounds. While it has usually put its money behind early stage start-ups, this time, IDG may be seen propelling growth by participating in Series B and even C rounds. The Lenskart funding round, IDG recently participated in for example, was the start-up’s series D.
This information was obtained through a person said to be intimately familiar with the whole matter.
IDG’s current portfolio includes startups like Myntra, Lenskart, Zivame, Tripoto, CityFlo, RentoMojo, Zimmber, Vserv, Manthan, Perfint, NestAway etc.
The fact that IDG is looking to put in money into companies at growth stage and beyond, marks an interesting trend shift among VC firms, including the likes of Sequoia Capital and Accel India. All of these firms have put money into at least one start-up at what turned out to be at an inflated valuation. What’s more, the firms have also learned their lesson of investing in companies with a bright idea but a lack of the skills required to take the idea to execution.
Which is perhaps why they seem to be rather keener to bet their money upon companies that have already established themselves and are looking to expand further. IDG has reportedly deployed its new fund already and the monies for its participation into the HealthifyMe and Lenskart funding, were sourced from there.
Meanwhile, one of the sources behind this information also said that IDG was raising most of the funds through domestic investors like family offices besides existing limited partners. The firm is also working with Mumbai-based Edelweiss Wealth Management — which is expected to muster Rs 100 crore from its clients.
Meanwhile, IDG’s decision to double its fund size is certainly surprising, considering that it comes at a time when most other funds are displaying wariness at the prospect of putting money into Indian startups. True, Sequoia Capital and Accel India are bulking up as well, however, they are keeping a large section of their funds reserved for companies already on their portfolio.
As per data from VCCEdge, VC firms struck just 90 deals in the January-March quarter, as compared to the 138 deals inked in the same period, one year-ago. Meanwhile, the total value of VC dollars also dropped by almost 80% to just $337 million in the first quarter of 2016 from $1.79 billion a year ago.
Well, nothing appears upon the horizon to disturb the current status-quo. True, Venture firms are mobilizing funds, but this time around, they are displaying an increasing wariness into putting them into new ideas and ventures.