The Capital Quest | Chiratae’s debut growth fund oversubscribed, collects $90 mn at first close

On Nov 8, 2022

Indian venture capital firm Chiratae Ventures, which closed its fourth fund after increasing its size by a quarter, has marked the first close of its maiden growth fund.

The Chiratae Growth Fund – I has made the first close at Rs 759 crore, or a little over $90 million. The VC firm said it will close the fund by the end of this year with an oversubscription.

This fund was originally aiming at a corpus of Rs 750 crore and had a green-shoe option of another Rs 250 crore.

The new fund counts LPs such as Kris Gopalakrishnan Family Office, Choksi Family Office, SBI, and IIFL Wealth and Asset Management among others.

Growth funds are meant to be for late-stage startups who have scaled up and need capital to grow the business further. Early-stage VC firms, like Chiratae, have the option to participate in funding rounds at a later stage too but when the round size increases, it becomes difficult for smaller funds to pitch in even with a portion of their fund reserved for such follow-on rounds. As a result, they lose their pro-rata right to participate.

A separate growth fund would allow Chiratae to come in and invest even in larger-sized Series C and beyond funding rounds in existing portfolio firms as also other late-stage investment opportunities in new companies.

The new fund is sector-agnostic and is seeking to invest across 15-20 companies by 2025.

This comes just a year after its fourth fund—Chiratae’s largest—raised $337.37 million (Rs 2,500 crore then) from 245 investors. This is up from the target of $275 million that it hit in April.

Chiratae, which was formerly known as IDG Ventures India and rebranded in October 2018, had floated the fund in late 2019. The fund comprises two vehicles—one registered in Mauritius and the other domiciled in India.

The VC firm had raised its first fund in 2006-2007, scooping up around $150 million. The second fund missed its target of $175 million and ended up collecting $95-100 million during 2012-2014. The third fund hit the final close in 2017 after securing capital commitments of $200 million.

The new fund invests in health-tech, fintech, agri-tech, consumer media, deep-tech and software-as-a-service companies. It began investing in 2019 and has backed companies such as CropIn, GoMechanic, Pando and Uniphore.

Overall, the VC firm has invested in around 100 companies over the past 16 years and has exited three dozen. Its portfolio also includes companies such as Curefit, FirstCry, Lenskart, Policybazaar and e-commerce firm Flipkart.