Mumbai: Iron Pillar, a mid-stage-focused venture capital (VC) firm, has made the final close of its $90 million maiden fund, senior company executives said.

The company, founded by former Morgan Creek director Anand Prasanna, former Citigroup India investment banking head Sameer Nath and former DFJ India head Mohanjit Jolly, announced the first close at $20 million in May 2017.

The fund was primarily raised from overseas investors, with US entities contributing the most, managing partner Nath told Mint. “The US represents the largest limited partner (LP) base, followed by a diversified group of investors from Europe, the Middle East, Singapore and China. We have an India fund, too. Overseas Private Investment Corp. (OPIC), the US government’s development finance institution, is our largest investor. Around 65% of the fund has been raised from offshore investors and the rest from India. IIFL and Small Industries Development Bank of India’s India Aspiration Fund were the largest domestic LPs, who came in during our first close last year."

Unlike most venture capital firms investing in Indian tech start-ups, Iron Pillar invests in mid-stage companies, including in Series B, C and D rounds. The strategy translates into a smaller portfolio compared to peer funds.

The fund corpus makes Iron Pillar one of the largest first-time VC funds in India, in dollar terms. “Our’s will be a concentrated portfolio of about 9 to 10 deals, so that the bar is very high in terms of capital deployment. We are talking of $5-10 million ticket sizes," Nath added.

The VC firm has so far backed NowFloats, BlueStone and Servify. Last month, Mint reported that Iron Pillar had led a $15 million Series B round in Servify, which provides personalized after-sales service and management for smartphones. “We have a hybrid strategy in key respects, that is, we sit in between early-stage venture capital and private equity. But in terms of returns from an investor perspective, on a risk-adjusted basis, we expect to be closer to venture than to private equity."

According to managing partner Prasanna, the growth of internet adoption and cloud-based services in recent years has created a need for mid-stage focused funds, which could also bring the right capabilities to help tech start-ups grow to the next stage.

“Around 2012, three major forces started shaping the Indian start-up ecosystem. With smartphones and internet becoming cheaper, we could see that the number of Indian internet users was set to grow by at least 10 times in the next 5-6 years from a user base of 45 million in 2012. Also, that is the time when enterprise cloud adoption went through an inflexion point, where Indian entrepreneurs started building products for the world and we saw early signs of the Indian software as a service revolution," Prasanna said.

“The two theses of consumer tech becoming big and democratisation of enterprise tech happening, with India having a very significant twin advantages of highly skilled engineers and reducing cloud costs, compelled me to set up a mid-stage tech fund focused on India," Prasanna added.

“The thought was that many of these companies would get funded in early-stage, but when it comes to the next level, there are not enough people who are funding them or bringing the right kind of mid-stage capabilities to the table."

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