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IDG Ventures to raise new fund of Rs 1,300 crore

Economic Times:  September, 2015

Bengaluru/Mumbai: VC fund IDG Ventures is raising a new fund of about Rs 1,300 crore ($200 million) according to three people aware of the plans, marking an over two-fold increase in the corpus it raised less than a year ago. The fund raising, expected to begin formally in October, will mark the launch of the third India fund for the technology investor, which will tap both overseas and domestic investors with an aim to raise a quarter of monies in the form of rupee capital.

"They have started talking to family offices," said one of the people quoted above. The fund, which recently roped in Tata Group's chairman emeritus Ratan Tata as an adviser, has approached at least 150 family offices and has received about 50% of the commitments said a second person who briefed ET on the developments. "The addition of Ratan Tata raises the credibility of the fund and is likely to have rub-off benefits," said one of the sources mentioned above. Among those expected to be involved in the fund raising process is Edelweiss Wealth Management, which is expected to mobilise around Rs 100 crore from its clients. IDG declined to comment on the developments.

The investment firm last raised a fund of Rs 600 crore in November 2014 and has entered the market in quick succession in keeping with a growing trend in the venture capital market in the country.

Sequoia Capital, which raised $530 million (Rs 3,496 crore) in May 2014, is expected to raise $800 million (Rs 5,277 crore) for a new fund by end of the year, as ETreported earlier this month.

Typically venture funds raised fresh capital after a gap of three to four years.

Experts are of the view that this aggressive new mode is driven by the surge of entrepreneurial activity in India where two startups are estimated to be launched every day.

"Fundraising cycles also depend on what kind of opportunities you see for the segments a firm is investing in, and LPs (limited partners) will only be ready if a team has delivered," said Sanjeev Krishna, transaction services and private equity leader at PwC India. IDG Ventures has built a portfolio of several niche etailing companies including FirstCry and Zivame.

It acquired a holding in Flipkart when Myntra was bought by India's largest online retailer last year. The fund has also backed Forus Health, a maker of ophthalmology prescreening devices and Perfint Healthcare, an oncology-focused medical device maker, among others.

"They (IDG) have helped in hiring and connecting with other funds and ecommerce firms in their portfolio" said Supam Maheshwari CEO of FirstCry.com.

IDG was one of the first to have rupee capital or financing from investors in India.

"We are seeing a blend of new money and younger custodians of old money coming into this asset class. As a result, VCs are targeting family offices more strategically," said Sanjay Anandaram, partner at Seedfund.