“This is the fifth close, but the fund is likely to close at around $ 120 million as the startup ecosystem is bullish today. We are evaluating a 7% or higher holding in the startup we invest in,” the founding partner of the company of investment Apoorva Ranjan Sharma told ET.
9 Unicorn fund for the inaugural accelerator, established in 2020, provides funding of approximately $ 300,000 to $ 1 million to startups in the first round and approximately $ 500,000 to $ 2 million in subsequent rounds with co-investors. LPs include high net worth individuals (HNIs), large family businesses and institutions in Egypt, the United Arab Emirates, Africa, Singapore, London and Africa. 9Unicorns did not disclose the names of the LPs. These investments are routed through a feeder fund established in Mauritius.
A feeder fund is a fund vehicle set up outside India, for example in Singapore or Mauritius, which then invests in the capital markets in India.
According to Sharma, he has invested nearly $ 45-50 million in various startups, including an edtech company Vedantu and Shiprocket logistics aggregator. He has also supported the likes of Biddano, BluSmart, IGP.com, Faarms, Instoried and GoQii.
Venture Catalysts, the parent company of 9Unicorns, has invested in over 150 startups, including OYO Rooms, BharatPe, RentoMojo, FYND, Innov8 and Beardo.
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“We invested in 101 deals in 2021 through 9Unicorns’ inaugural fund and expect to double that amount this year. We will finish distributing the fund by the middle of next year, after which we plan to launch our second fund, ”Sharma said.
While 9Unicorns is likely to extend the size of its first fund, there will be more scrutiny by the fund before writing a check.
“Going forward, the due diligence will become more rigorous, Sharma said. “The delay in funding isn’t because VCs aren’t investing money, it’s just because they want to be doubly cautious that whatever is pledged will be delivered,” Sharma said.
His comments come at a time when myriad startups are facing greater scrutiny over their financials amid a slowdown in funding, especially in late-stage funding.
“The information gathering process should be very strong these days. When a company applies to 9Unicorn, we have developed a powerful data engine. Businesses at the idea stage don’t have a lot of data, but our legal and corporate due diligence team is working on several ways to strengthen the process, ”Sharma said.
“We have been very cautious about investing in companies and have invested in companies with strong business models,” he added.
The fund wishes to invest in innovations and new technologies in sectors such as deeptech, web3, fintech, media tech, insuretech and healthtech.
“We are excited about new industries like the metaverse and have just committed to one [such company] for a big investment tokenization, agrotechnologicalAnd supply chain Other semiconductor companies that are doing disruptive work are very exciting for us, “he added.