Sharechat backer India Quotient closes Fund III at $60 million; raises $40 mn for later stage bets

India Quotient (IQ), the Mumbai based venture capital firm founded by former Seedfund executive Anand Lunia, has raised $60 million for its third successive fund. In addition, the firm has also raised $40 million as part of the first close of its Opportunities Fund to back portfolio companies in their Series B and growth funding rounds. 

The latest commitments take IQ’s total funds under management to more than $200 million. 

The firm announced the first close of Fund III in April this year and has already deployed capital from it across 20 companies. The new fund will continue to back companies at the seed stage. 

“We are halfway through the number of companies we have been looking to invest in through Fund III. We will deploy the remaining capital in 15 to 20 companies over the next two years,” Prerna Bhutani, partner at IQ, told TechCircle.

Limited partners or investors in Fund III include a mix of family offices, entrepreneurs, and some China based funds and angels from China, and other HNIs (high networth individuals). IQ’s existing limited partners include Flipkart co-founder Binny Bansal and Singapore headquartered RB Investments, among others.

In August, the firm said it was also raising the Opportunities Fund. “Based on certain premises and criteria which we have set up, we will deploy the capital from the Opportunities Fund in addition to the main fund staying invested. Since we come in at a very early stage of a company, this gives us the opportunity to back our companies till later stages of growth,” said Bhutani.

The Opportunities Fund saw participation primarily from clients of  Kotak Wealth, the distributor for the fund. The final close of the fund will be concluded over the next quarter, Bhutani added.

Lunia founded IQ in June 2012 with a modest $5 million Fund I. The mandate at the time was to back pre-revenue startups in a market that faced a severe funds crunch at the seed stage. It was also one of the first funds in this market to raise a sizable portion of its corpus from established entrepreneurs. Early investors in the fund included Infibeam founder Vishal Mehta, Rebel Foods founder Jaydeep Barman (Lunia was one of the earliest angels to back Rebel Foods when it was still known as Faasos), Carwale founder Mohit Dubey, MakeMyTrip founder Deep Kalra and Paytm founder Vijay Shekhar Sharma.

Three funds later, the firm now counts companies such as SME lending platform Lendingkart, native languages based social network Sharechat, internet-first cosmetics brand Sugar, and shared mobility startup Cityflo, among several others. It has fully exited 12 of its investments, according to information on its website, and completed a partial exit from Sharechat. 

IQ invested in Bengaluru headquartered Sharechat in 2015 from its second fund and sold a 1-2% stake for a reported Rs 50 crore to China’s Hillhouse Capital in October 2017. It continued to hold a 5% stake in the company, media reports said at the time. Sharechat last raised capital in August this year in a $100 million round that saw the participation of new investors Twitter and TrustBridge Capital. Multiple media reports had put the post-money valuation of the company at the time at $600-650 million.

Early stage investing in India has lately seen heightened activity with firms such as Endiya Partners and IAN Fund raising new funds to invest at the seed and Series A stages.