Positive response has prompted early-stage venture capital (VC) firm YourNest to enhance the corpus of its second fund to $65 million (Rs 450 crore) from the initial figure of $45 million (Rs 300 crore). The fund was launched in September 2016.
“We have increased the target for our second fund from Rs 300 crore to Rs 450 crore in view of better response from limited partners (LPs) across the markets,” said YourNest Founder & CEO Sunil Goyal. LPs are investors in VC or PE firms such as family offices, pension funds or endowments.
The firm is targeting family offices in Hong Kong, Middle East, the US and a fund of funds in the US. Called YourNest India VC Fund-II, it has received Rs 105 crore from two government institutions — Rs 60 crore from the Electronic Development Fund (EDF), a fund of funds from the Ministry of Electronics & Information Technology and the remaining Rs 45 crore from the government's Rs 10,000-crore fund of funds (FoFs) programme for start-ups, managed by the Small Industries Development Bank of India (SIDBI). These two infusions have helped YourNest generate interest in overseas LPs. Goyal said the fund raised Rs 300 crore, which included funds from domestic family offices, CXOs. The corpus will back technology-led ventures in areas such as Internet of Things (IoT), Software as a service (SAAS), and robotics.
“We are going after product start-ups, which can fetch unimaginably higher value (returns),” said Goyal. It has already invested in four start-ups.
YourNest invests in pre-Series-A funding of start-ups and competes with other VC firms such as Blume Ventures, Kae Capital, VentureEast and others. It had raised Rs 90 crore for its first fund in 2015, and invested in 16 start-ups. It is yet to make an exit, and has written-off four investments. The mark-to-market value of its portfolio has grown 3X.
“We have stayed focused on pre-Series-A funding, done fewer deals than a spray-and-pray approach, kept money for follow-on funding and brought relevant people," said Goyal, who have brought in founding partners Sanjay Pande and Girish Shivani. Similarly, while launching its second fund, it strengthened the team by bringing in tech experts Vivek Mansingh, Satish Magulavalli. It has also roped in Mohit Hira and Hetal Sonpal as advisors/entrepreneurs-in-residence.