Fund for early-stage investments A new group of entrepreneurs in the consumer, fintech, software-as-a-service (SaaS), and digital health industries will be supported by $200 million raised by 3one4 Capital, an investor in firms such as Licious, neobank Open, Jupiter, and software company Darwinbox.

Pranav Pai, founding partner at 3one4 funding, almost 50% of the funding in the new fund came from Indian banks and mutual funds. The remaining limited partners (LP), who contribute to venture capital funds, include US university endowments, foreign sovereign funds, multinational enterprises, insurance companies, and Indian businesses. They also include senior family members and huge family offices. Pai, institutional investors contributed up to 90% of the fund's funding.

Even though it has made investments in five new firms with money from the most recent flagship Fund IV, the company will legally close the fund by the end of the current quarter. The Bengaluru-based investor has two opportunities funds in addition to three flagship funds.

"We started the Fund IV process in January, and within two and a half months, we got a commitment of $250 million, which is higher than our last fund. We decided to keep it a $200 million fund because of our strategy, performance in the early-stage market, and ecosystem developments, said Pai of the new fund. Initially, 3one4 Capital planned to have a $150 million corpus for its third fund, but ultimately boosted it to $200 million.

"There are new institutional LPs that have come in this fund," claimed Pai, whose fund also invests in companies including financial WeRize and social media startup Koo. He omitted to mention the new LPs, but some of the returning LPs include Premji Invest, the largest gaming company in South Korea, Krafton Inc., and the CDC group in the UK.

Partners at the fund include Pranav Pai, his brother Siddarth Pai, Anurag Ramdasan, and Nruthya Madappa. For follow-on investments in already-existing enterprises, Ramdasan said the company has funds in store from Fund III, but fresh investments will come from the new fund.

"Deployment hasn't presented any difficulties. We look at roughly 7,000 businesses and typically invest in 8–10 businesses. We still completed eight or so deals in 2022 despite it being a sluggish year for VCs. We can still use enough money right now. Regarding the present lull in deal activity across stages, Ramdasan stated that two to three investments are already planned with the new fund. Over time, he anticipates that the new fund will make investments in at least 30 companies.

Investments made by 3one4 Capital range from $0.5 million to $5–6 million. The average cheque amount is between $1.5 and $3 million. According to Pranav Pai, "We may raise another opportunities fund (follow-on fund) for Fund IV as well, but that relies on whether or not we have a batch of equally successful enterprises.

The launch of the new fund by 3one4 Capital coincides with the fact that companies like Sequoia Capital India, Lightspeed Venture Partners, and Accel have already raised sizable sums during last year and are holding a sizable amount of unspent assets. Chiratae Ventures, a venture capital firm, reported last week that its first growth fund had reached its final close at just over $112 million. The total value of the portfolio companies managed by 3One4 Capital is currently around 750 million dollars.