“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 looking a 7% or higher stake in the startup we invest in,” the investment firm’s founding partner Apoorva Ranjan Sharma told ET.
9Unicorns’s maiden accelerator fund, set up in 2020, provides funding of around $300,000 to $1 million to startups in the first round and around $500,000 to $2 million in subsequent rounds with co-investors. LPs include high-net-worth individuals (HNIs), large familiy businesses and institutions in Egypt, the UAE, Africa, Singapore, London and Africa. 9Unicorns did not reveal the names of the LPs. These investments are routed through a feeder fund set up in Mauritius.
A feeder fund is a fund vehicle set up outside India, for example in Singapore or Mauritius, which then invests in capital markets in India.
According to Sharma, it has invested close to $45-50 million across various startups, including edtech firm Vedantu and logistics aggregator Shiprocket. It has also backed 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’s maiden fund and plan to double that amount this year. We will finish deploying the fund by the middle of next year, after which we plan to launch our second fund.” Sharma said.
Even as 9Unicorns is likely to extend its maiden fund size, there will be increased scrutiny from the fund before signing a cheque.
“Going ahead, due diligence will get tighter, Sharma said. “Delay in funding is not because VCs are not putting in money, it is only because they want to be doubly cautious that whatever is committed will be delivered,” Sharma said.
His comments come at a time when a host of startups are facing increased scrutiny on their financials amid a funding slowdown, especially in late-stage financing.
“The information gathering process should be very strong these days. When a company applies to 9Unicorn, we have developed a strong data engine. Idea-stage companies don’t have much data but our legal and business due-diligence team is working on different ways to strengthen the process,” Sharma said.
“We have been very cautious to put money in companies and we have invested in companies with strong business models,” he added.
The fund is keen to invest in innovations and new technology in sectors such as deeptech, web3, fintech, media tech, insuretech and healthtech.
“We are excited about new sectors like metaverse and we have just committed to one [such company] for a big investment. Tokenisation, agritech, and supply chain and semiconductor companies that are doing some disruptive work are very exciting for us,” he added.
