Through this fund, the firm plans to invest in about 25 early-stage startups, with average starting investment amount ranging from Rs 30-50 crore. It has already deployed 40% of the capital from the third fund to startups such as Dhruva Space, Snitch, Celcius Logistics, GradRight, Eggoz and Flexifyme.
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The capital for IvyCap’s third fund has primarily been raised from domestic limited partners, or sponsors of funds, including institutions like IIT Alumni Trust, and local family offices, it said in a statement.
The third fund had made its first close at Rs 1,608 crore in February 2022. It had come at a time when several investment firms in India were increasingly raising rupee-denominated capital to back startups. These included A91 Partners, Stellaris Venture Partners, Alteria Capital, and Edelweiss Alternative Asset Managers.
IvyCap said 20% of the fund is earmarked for investing in its existing portfolio companies, with the firm stepping in as a co-investor during these companies’ future fundraising rounds.
A war chest Rs 100 crore has been set aside for investing in seed-stage companies, managed by a separate team leveraging the IvyCamp platform, the firm said.
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“We are actually seeing a lot of ideas for disruption while we are still prioritising sectors like consumer tech, health tech, fintech, B2B, SaaS and enterprise models. These are highly disruptive areas for example generative AI, machine learning, blockchain, and internet of things,” said Vikram Gupta, founder and managing partner, IvyCap Ventures.“Climate tech is an area which we are quite closely looking into because globally that’s becoming the theme and we are quite actively looking at that,” he added.
In 2014, IvyCap launched its maiden fund with a corpus of Rs 240 crore, and invested in 10 companies, while Fund II was more-than-double the size at Rs 530 crore.
According to Gupta, in the first fund they targeted to raise Rs 200 crore with the idea that 25% of the profits generated by them as fund managers will be allocated as endowments to the IITs.
In its first fund, IvyCap clocked a nearly 3x distribution of cash to paid-in capital (DPI), whereas the second fund has seen a 0.4x DPI, mainly driven by exits through mergers and acquisitions of companies like Clovia, acquired by Reliance, Sokrati, acquired by Dentsu International, among others. Its first fund achieved a Rs 330 crore exit, delivering 22x return on investment in Purplle.
DPI is a metric that measures the realised profits that have been distributed by a fund back to its investor base. It is a ratio of cumulative proceeds returned to a fund’s limited partners relative to its paid-in capital.
“In Fund II, we raised Rs 530 crore when we were targeting Rs 500 crore. We followed the same approach of investing in early-stage companies and looking for disruptive businesses,” said Gupta. The fund invested in 15 new companies between 2018-2021.
Founded in 2011, IvyCap Ventures has invested in around 50 companies spanning sectors such as healthtech, consumer tech, deeptech, fintech, edtech, agritech and spacetech.
Meanwhile, IvyCap Ventures’ managing partner Tej Kapoor has left the firm.
“Tej Kapoor was there for a short period of time, more as a support for us. He came in very recently to help us for a few things…his work is done already. Our core team is myself, Ashish Wadhwani, Anju Gupta and Vishal Gauri…we’re the cofounders of the fund. We had given him a partner tag, but he had come in with a specific assignment for us,” Gupta said.
Kapoor did not respond to queries at the time of publishing.
