Chiratae Ventures closes its largest fund at $337 million

CIOReviewIndia Team | Friday, 06 August 2021, 03:50 IST

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1Indian venture capital (VC) firm, Chiratae Ventures on Friday announced the final close of its fourth fund at $337 million, marking its largest investment fund till date since inception in 2006.

Almost half of Fund IV was raised by from Indian investors including family offices and industrial families from India, as Chiratae continues its focus on being a domestic fund backed by Indian limited partners (LPs).

According to the VC, its Fund IV was oversubscribed by 25%. It marked the first close of its Fund IV back in 2019 worth $150 million.

It has already invested $100 million from Fund IV with another $30 million in the pipeline to be deployed.

The early-backer of Flipkart and Myntra among others plans to continue its focus on backing new-age technology companies, as it doubles down its focus on early-stage investing.

“There is significant traction which covid has provided to technology businesses. This has made companies reach scale with profitability much faster than expected. It is an interesting time for startups where exits, follow-on rounds and investments are increasing; making funds like ours grow faster. Almost 50% of our Fund IV is from Indian LPs. We believe that Indian capital is key to the startup ecosystem and have been raising it since our Fund II. This has made a big difference in Chiratae’s journey,” said Sudhir Sethi, founder and chairman.

Chiratae had launched its first fund of $150 million in 2007 with investment from US-based media, data and marketing firm IDG Inc.

It floated its $95 million second fund, IDG Ventures Fund II, in 2013, and closed its third fund in 2017 at $208 million with investment from International Finance Corp. (IFC), the World Bank’s private investment arm, and from Cisco Investments.

According to Chiratae, it has completely deployed its Fund III investing it across 36 startups in India.

The VC is also looking to open an office in the US, as it looks to support the international ambitions of its portfolio. Close to 40% of Chiratae’s portfolio is focussed on global growth opportunities, the VC said.

Over the past few years, the VC has been aggressively backing businesses across domains of consumer tech, fintech, health-tech, software-as-a-service (SaaS), deep-tech and agriculture.

“Indian capital sources were very skeptical about this asset class (of startups) seven or eight years back when we started. Today, the Indian domestic capital is very confident about this asset class, and understands it much better now. There are also examples of several exits, where companies have returned cash whether it is through acquisitions like Flipkart or public offerings like Zomato. And a dozen IPOs will happen, which will make Indian domestic capital even more comfortable,” said TC Meenakshisundaram, founder and managing director, Chiratae Ventures.

“We believe that in the next 20 years that at least 50% of SENSEX would be new age technology companies,” added Meenakshisundaram

Chiratae, at present has an asset under management of $950 million and has invested in more than 100 deals since its inception. Till date, the fund has given 38 exits, two of which are through public listings. Chiratae’s portfolio which has successfully listed in public markets includes travel portal Yatra, and automation platform Newgen Software Technologies.

Recently, Chiratae also announced the launch of their new seed initiative Chiratae Sonic that guarantees a 48 hour turnaround time on seed fund requests or investment pitches investments for a quantum of $500,000.

However, unlike its peers, Chiratae at present continues to operate with a ‘unified’ strategy while not carving out a separate fund for early-stage startups.

“We are going by design to have a unified fund. We have different teams internally for different stages of investment. But the culture of innovation and speed and agility, and impact and that cuts across all categories of investment continues to be the same all across,” added Sethi.

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