Exclusive: Indian VC Kae Capital crosses target for second fund, makes final close at $53m

Sasha Mirchandani, Kae Capital

Mumbai-based early stage investor Kae Capital has made the final close of its second fund at $53 million, crossing the hard cap of $50 million that it had initially set for itself, founder and managing director Sasha Mirchandani told DEALSTREETASIA.

In March last year, Kae Capital had raised $30 million from existing and new investors for its second fund. At the time, it had planned to raise an additional $10 million if required.

“It has exceeded (our initial target) but we’re happy to take that money. We had earlier planned to draw the line at $50 million, but we got a lot of interest, so we finally closed it at $53 million,” said Mirchandani.

About 60 per cent of the latest fund has been raised from domestic investors.

The investors in the fund include Small Industries Development Bank of India (SIDBI) Quilvest, a large European Fortune 500 company; Chinese and Japanese LPs; large global and domestic family offices, Tekton Ventures and Axis Capital.

It also bagged funding from prominent angel investors such as Deep Kalra of MakeMyTrip, former Infosys co-founder Kris Gopalakrishnan, Nitish Mittersain of Nazara, Sanjay Kapoor of Genesis Color, Pranay Chulet of Quikr, Jitendra Gupta of Citrus Pay, Ashish Hemrajani of BookMyShow and Sunil Munjal of Hero Group, among others.

Kae Capital had raised its maiden $25 million fund in March 2012. Investors in the first fund included venture capital firms Sequoia Capital, SAIF Partners and Omidyar Network; global fund-of-funds Axiom, Squadron Capital and Morgan Creek Capital Management; and a few HNIs such as Manish Kejriwal, managing partner of Kedaara Capital, and Kalra of MakeMyTrip.

From the maiden fund, Kae Capital invested in around 25 startups including health tech startup HealthKart, educational app Hello English, logistics firm Porter, and data security company SysCloud.

Earlier, Mirchandani had invested in his personal capacity in companies such as Myntra, the fashion portal sold to Flipkart in 2014, ad-tech company InMobi and data analytics firm Fractal Analytics, which raised $100 million in its last funding round in May 2016 from Malaysian sovereign wealth fund Khazanah.

The sector-agnostic venture capital fund has already invested in over 15 companies through this fund, meeting half the target of its planned 30-35 startups.

“We are looking at three types of companies — B2C technology, B2B tech, either within India or globally, and the last bucket is B2C non-tech,” explained Mirchandani.

The larger fund provides the venture capital firm with deeper pockets to help fill the gap in the funding void between the seed to Series A and Series B rounds.

Its targeted sweet spot for investment remains $600,000-800,000 going up to $1 million in the seed round, although it can invest up to $4-5 million in any one company, said Mirchandani.

“We’re seeing some good deal flow, it could have been better, but people are now more serious about entrepreneurship,” he added.

According to a report by Venture Intelligence, venture capital in India plunged to a three-year low in the second quarter of 2017. VC investments slid to 78 deals worth $275 million during the three months ended June 2017, 25 per cent lower compared to the same period in 2016. VC activity in Q2 2017 was also 7 per cent lower than the previous quarter, which recorded 84 deals worth $349 million.

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