IvyCap Ventures’ fund deployment strategy

In a recent conversation with YourStory’s Daily Dispatch powered by HSBC, Vikram Gupta, Founder and Managing Partner, IvyCap Ventures, talks about the recent first close of their third fund and discusses capital deployment strategies.

Founded in 2011, IvyCap Ventures is a venture capital firm based in Mumbai that invests in a wide array of startups. The VC firm recently raised about Rs 1,608 crore (around $214 million) in the first close of its third fund.

Vikram Gupta, Founder and Managing Partner, IvyCap Ventures says that their first two funds were relatively smaller. The company was initially planning on raising $200 million but the existing investors came around with a bigger commitment.

“About 70 percent of our commitments have actually come from the existing investors,” he says. The fundraising round has also substantial support from family offices as well.

In terms of investments, he shares that the fund sees opportunities in different places such as consumer-tech, healthtech, B2B (business-to-business), fintech and edtech, etc. The ticket size for the first investment will be around Rs 30-40 crore. The key difference is that the fund plans to reserve a substantial amount of capital as follow-on for the companies it expects to invest in Series A.

Vikram mentions that IvyCap Ventures is a returns focussed fund. In Fund I, out of the 10 companies were invested in, the fund has made four exits and the fifth exit is currently in process.

“We have been quite fortunate with the kind of value that we have created for investors,” he says. For Fund II, it had 3 exits, two last year and one that the firm is currently going through.

Talking about valuations in the startup space, he shares that the valuations of the companies in the startup space have increased massively and the primary reason being that there is a lot of capital flowing into India.

“At Series A, given the demand-supply gap, you don’t see too many funds primarily because there is too much hard work involved and there is a substantial amount of good opportunities available, thus few investors are interested to lead series A round,” he says. IvyCap Ventures is in the space of funding Series A rounds for startups.

“We’re not worried about valuations, we’ll do deals based on what we believe is right for our investment,” he says.