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An early-stage venture firm, 3one4 Capital supports startups in market categories where adjacent, high-growth sectors intersect. Its focus areas include software as a service (SaaS), enterprise and SMB automation, fintech, consumer internet, and digital health.
After 80 early-stage investments, the company is looking to expand its portfolio, says Pranav Pai, founding partner and Chief Investment Officer at 3one4 Capital, in an interaction with businessline. Edited excerpts:
Can you describe your fund deployment strategy till date?
We are currently deploying from our early-stage fund IV ($230 million). We have invested in 10 companies and plan to add about 20 more companies to this portfolio over the next three years, as we continue to expand and support promising early-stage ventures.
What is the typical time horizon for your investment?
Since we focus on early-stage companies, we are prepared for a holding period of 7-8 years for most of our investments. This time frame allows us to support the growth and development of these companies through their crucial early years.
How will the latest Union Budget impact the startup ecosystem, and which are the newer sectors in focus for 3one4?
There are proposed allocations for skill development, infrastructure, employment, and capital expenditure. For startups, the removal of angel tax is a particularly welcome and timely development. Additionally, the proposed allocations for spacetech and MSME [micro, small and medium enterprises] manufacturing will have a direct and positive impact on the startup ecosystem, providing crucial support and opportunities for growth.
What is your average cheque size?
We typically invest between ₹4 crore and ₹30 crore.
Which sectors are you bullish on?
3one4 Capital utilises its deep access to strategic corporations and investors, as well as its bottom-up proprietary sourcing engine to discover the next set of generational companies from the earliest stages. This selection is supported by deep research, based on market analytics, to pre-empt the mainstream investment patterns of the Indian VC [venture capital] market. The fund will target five areas for investment: Fintech, consumer internet, SaaS, enterprise and SMB automation, and digital health. It will also focus on emerging sectors such as manufacturing and industrial automation, climate tech, and logistics.
What is your preferred exit route?
We have completed 20 exits to date. Notable ones include Tracxn’s IPO, and the acquisition of Pocket Aces by Saregama, DoSelect by Naukri.com, and Wigzo by ShipRocket. We have made exits from Toddle, Oust, Leap.is, Aereo, Wiom, and others. We value a range of exit strategies, including IPOs and acquisitions, depending on what best aligns with growth potential.
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