Unicorn India Ventures is gearing up to bolster its third fund to ₹1,200 crore, with a focus on investing in 20-22 companies spanning various sectors including biotech, quantum computing, and space technology. This move to raise additional funds from US limited partners aims to provide enhanced portfolio support and achieve high returns. The expansion of the fund, originally set at ₹1,000 crore, is expected to be finalized in the coming months through the exercise of the greenshoe option.
The significant increase in the size of Unicorn India Ventures’ third fund marks a shift from its previous funds of ₹100 crore and ₹300 crore for Fund I and Fund II, respectively. With this expansion comes a rise in the cheque sizes as well, from $300,000 (₹2.5 crore) to nearly $1.5 million (₹12.5 crore) for seed-stage companies. The maturity of the industry post-pandemic has influenced this growth, positioning companies at more advanced stages when compared to earlier investments.
The firm’s investment strategy for the new fund includes focusing on semiconductor design, drone technology, defense-oriented quantum computing, biotech and bioengineering, and space technology. As deep tech sectors continue to witness a surge in demand, there is a trend towards oversubscription of funds, reflecting the growing appetite for startups in these domains. Unicorn India Ventures aims to invest in a total of 20-22 companies from Fund III, with investments already made in 14 companies and three more in the pipeline.
To date, approximately ₹180-200 crore has been deployed from the fund, with plans to complete building the portfolio in the near future. A strategic allocation of 20% of the existing fund is used for investments in the 20 selected companies, with 50% of the new fund reserved for high performers within the portfolio. This approach ensures that breakout companies, constituting around 20% of the portfolio, have access to $10-15 million from the firm for subsequent funding rounds.
In a deliberate shift from raising funds from traditional sources, Unicorn India Ventures has diversified its limited partner base by attracting investors from the US, including ex-entrepreneurs and tech company CXOs. This strategic move aims to bring added value to the firm’s portfolio companies in the future. When it comes to stakeholding in seed-stage startups, Unicorn India Ventures typically acquires a 15-20% stake, with exits typically occurring through secondary transactions in Series C rounds or acquisitions.
The performance metrics of Unicorn India Ventures’ funds reflect a robust track record, with the first fund showcasing distributions to paid-in capital (DPI) exceeding 3.0x. The firm anticipates a potential 4-4.5x return from its second fund, underscoring its capability and credibility in generating profitable exits. As deep tech venture capital firms witness heightened activity and fundraising, this trend is attributed to macro-economic shifts and the emergence of new players in the ecosystem, signaling a positive outlook for growth-stage capital availability in the sector.
- Unicorn India Ventures’ fund expansion to ₹1,200 crore signifies a strategic shift towards bolstering investments in biotech, quantum computing, and space technology.
- The firm’s approach to diversifying its limited partner base by attracting US investors aims to enhance portfolio support and drive high returns.
- With a focus on scaling operations, Unicorn India Ventures plans to invest in 20-22 companies from its third fund, targeting sectors such as semiconductor design, drone technology, and biotech.
- A strong track record of profitable exits and a commitment to supporting breakout companies highlight the firm’s operational excellence and investment strategy in the deep tech landscape.
Tags: biotech
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