Draper Fisher to raise $400 mn for start-ups

Draper Fisher to raise $400 mn for start-ups

Bangalore: Menlo Park, California-based venture capital firm Draper Fisher Jurvetson (DFJ) is half-way through raising $400 million (Rs1,852 crore) for its proposed 10th fund. The backer of firms such as Polaris Wireless Inc. and Pressmart Media Ltd, DFJ is raising around 38% less than its previous fund of $650 million, from which it is currently investing.

DFJ, which is primarily an early stage investor, puts money into the US, India and China from a global fund. With one of the biggest portfolios of investee firms, DFJ’s India kitty includes the likes of travel portal Cleartrip.com, Reva Electric Car Co. and mobile value added services firm mChek India Payment Systems Pvt. Ltd.

The firm is hopeful of raising the target amount by March, Bloomberg reported.

Around 10-20% of the amount may get invested in India, Mohanjit Jolly, executive director, DFJ India, told Mint.

“There is no hard and fast rule, it will depend a lot on the investment opportunities that come our way," Jolly said in a phone interview. Since 2005, DFJ has invested over $75 million in 18 firms in India. For the domestic market, the firm has opened up to do mid- to late-stage and non-technology deals.

After lying low for nearly 18 months, venture capital (VC) and private equity firms are now beginning to restart raising capital. While overall VC deals have fallen 57% to 58 deals in January to October this year, compared with last year, India’s growth is the fastest in the world after China and continues to lure investors.

“India has been and will be a story of growth for decades to come," Jolly told Bloomberg.

Prominent global VCs who have invested in India and raised capital this year include California-based Norwest Venture Partners (NVP), which raised a $1.2 billion venture-capital fund, and Greylock Partners, which raised $575 million to back start-up companies. New Enterprise Associates (NEA) is also close to achieving its target of $2.5 billion for its fund XIII.

The current appetite is for smaller funds, an expert said.

“In today’s market, you need smaller funds as big deals are not available. For smaller deals, you are better off with smaller funds," said Pankaj Dhandharia, partner, transaction advisory services, Ernst and Young India, a consulting and auditing firm. He further added that as raising capital is still difficult in this market, it makes more sense to raise a smaller corpus for funds whose liquidity is drying up.

On the issue of having a separate country-designated corpus for India, Jolly had said earlier that it could only be considered after the firm had made some exits in India.

In September, DFJ had bought the European venture capital portfolio of 3i Group Plc (a private equity firm) by teaming up with secondary investors Coller Capital and HarbourVest Partners.

Bloomberg contributed to this story.