Even as Indian early-stage venture capitalist 3one4 Capital had the option of raising a much higher sum for its fourth investment vehicle, it chose to stick to its earlier $200-million target amidst current macroeconomic headwinds.
The capital raised by the fourth fund is roughly the same size as its predecessor, which closed in 2020.
“This, we thought, would be a prudent decision keeping the current vagaries of the global economy in mind, although I must say India is doing much better than others,” Pranav Pai, founding partner at 3one4 Capital told DealStreetAsia.
The fourth vehicle drew significant interest from limited partners (LPs) and saw it get oversubscribed to over $250 million within a short span of its launch in January 2023. The fund was closed in May.
“Companies can raise Rs 10 crore in the first round and then Rs 10,000 crore in the next few rounds, and that’s a 1000x growth. But funds can’t and should not grow like that suddenly,” said Pai.
“If you suddenly give us half a billion, what will change? It’s not like we can work better with these companies. If we invest in more companies, we may actually end up diluting the quality of our assets,” he added.
