IvyCap Ventures closes third fund, raises ₹2,100 crore

Early-stage investor IvyCap Ventures on Tuesday announced the closure of its third fund at ₹2,100 crore, exceeding its initial target of ₹1,500 crore.

According to Vikram Gupta, founder and managing partner, IvyCap Ventures, the firm utilized the greenshoe option to secure the additional capital.

Around 90% of the capital was raised from domestic investors, and the remaining amount was contributed by the alumni of Indian Institutes of Technology (IITs) from around the globe, Gupta added.

“60% of the capital was raised from our existing institutional investors, 20% from IIT alumni and 20% from family offices, marking their inaugural participation."

The existing investors had also contributed to IvyCap Ventures’ funds 1 and 2.

Following the successful fundraising, IvyCap’s assets under management (AUM) has reached ₹5,000 crore.

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IvyCap seeks to back 25 firms with seed money and Series A investments from its third fund, with an average initial investment of ₹30-50 crore.

“25 new companies with average ticket of ₹50 crore takes its to about ₹1,250 crore. 20% of the thrid fund, or around ₹400 crore, will go into follow-on rounds, and 5% or about ₹100 crore, will be allocated to seed-stage investments,” said Gupta.

So far, IvyCap has deployed 40% from the third fund. The portfolio includes GradRight, Flexifyme, Celcius, Agraga, Eggoz, ZestIot, Snitch, Beatoven.ai and Dhruva Space.

It has also made follow-on investments from its first two funds in LendBox, Miko, Biryani By Kilo and BlueStone.

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While IvyCap has typically prioritized Series A investments, the third fund marks its foray into seed-stage investments.

“We didn’t do it earlier because we were very focused on exits, and exit frames are longer with seed investments. In this fund, our investors say that we can take the risk and put 5% in seed funding,” said Gupta.

India boasts about 125,000 registered startups, of which 25,000 have received angel funding, while about 5,000 secured some form of Series A funding, he added.

“This translates into 114-115 unicorns in the country. At the 25,000 level, there are quite a few startups that are ready to scale, but they get neglected because there’s not enough funding and guidance. Funding might still be available, but we believe that a support system is missing where the follow-on rounds can also happen.”

IvyCap Ventures Fund 1 realized a ₹330 crore exit, with 22x return on Purplle. It is working on another big exit.

“We have created India’s first dragon, a company that gives you exit value of more than 1x of the entire fund. When we exited Purplle in 2021, ₹15 crore investment gave us ₹330 crore in cash outcome. We expect to see (online jewellery startup) BlueStone as the second dragon from fund 1,” said Gupta.

IvyCap Ventures manages a portfolio of around 50 companies spanning sectors, such as healthtech, consumer tech, deep tech (comprising software-as-a-service or SaaS, artificial intelligence (AI) and machine learning (ML), and Internet of Things), fintech edtech, and emerging sectors like agritech and spacetech.