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Unicorn India Ventures to boost third fund to ₹1,200 crore for AI, space tech, biotech startups

4 min read 25 Aug 2025, 11:38 am IST

Rwit Ghosh

Unicorn India Ventures is set to expand its third fund to ₹1,200 crore, investing in 20-22 companies across sectors like biotech and quantum computing. The firm has raised funds from US limited partners to enhance portfolio support and aims for high returns.

Unicorn India Ventures' third fund is significantly larger than its previous offerings of ₹100 crore and ₹300 crore.

Early-stage deeptech investor Unicorn India Ventures (UIV) is likely to exercise the greenshoe option for its ₹1,000 crore third fund, bumping the size of the fund to ₹1,200 crore, according to the firm's founder. The fund is expected to close in the next couple of months.

“We're a ₹1,000 crore fund, but we're most likely to get into the greenshoe area for the closing. We'll be somewhere in the greenshoe area at close, between ₹1,000 crore and ₹1,200 crore," Bhaskar Majumdar, founder and managing partner at Unicorn India Ventures told Mint in an interview.

Unicorn India Ventures' third fund is significantly larger than its previous offerings. Fund I was ₹100 crore, while Fund II was ₹300 crore. With the third fund, cheque sizes have gone up considerably as well, from $300,000 ( ₹2.5 crore) to seed-stage companies from the first fund to nearly $1.5 million ( ₹12.5 crore) now.

“The industry is at a stage where it's far more mature. While our position as a first institutional investor hasn't changed, companies that we invest in are in a more developed stage post-pandemic," Majumdar said.

With the new fund, the firm plans to invest in semiconductor design, drone technology, defence-oriented quantum computing, biotech and bioengineering, and space technology.

Deep tech-focused firms are increasingly creating larger funds as the appetite for startups in the sector grows. This has led to firms finding their funds oversubscribed because of the surge in demand.

When it comes to artificial intelligence, the focus is on the back-end, like cybersecurity and data centre solutions. “We're not looking at front-end solutions like applications. My personal view is that when a sector is very crowded and uncertain, you don't know who will win, but its clear that the back-end will succeed," said Majumdar.

Out of Fund III, the firm plans to invest in a total of 20-22 companies and has already made investments in 14, with three along the way. Some of the firm's investments from the latest fund include B2B manufacturing startup Venttup, underwater robotics company EyeROV, and dental and medical consumables company Piscium.

“Currently, we've deployed between ₹180 crore and ₹200 crore," said Majumdar, adding that the firm will be done building its portfolio in the next couple of months. The firm uses 20% of an existing fund to make the investments in the 20 companies that will make up the portfolio from the current fund.

It will reserve 50% of the new fund for high performers in the new portfolio. In UVI's experience, about 20% of their portfolio companies are breakouts, which in this fund will gain access to $10-$15 million from the firm when they go looking for their next round of funding.

Also Read | India’s manufacturing bet draws millions as sector-focused funds surge

Raising from the US

For its first two funds, Unicorn India Ventures raised money from institutional investors like banks, mutual fund houses and corporates, along with high-net-worth individuals and family offices.

But the reason they've raised a much larger fund this time around is because they went looking for limited partners from the US, primarily so that they can add value to the firm's portfolio companies going forward. “We raised from ex-entrepreneurs as well as CXOs at tech companies. The US move was a very conscious move for us to enhance the LP base," Majumdar said. The contributions from all three are roughly equal.

High stakes and profitable exits

When Unicorn India Ventures invests in a seed-stage startup, it generally takes a 15% to 20% stake. The firm prefers to be along for the ride, i.e., a company going public, but it typically exits through a secondary transaction in a Series C round or if a company gets acquired.

From UIV's first fund, the firm's distributions to paid-in capital (DPI) was “north of 3.0x," according to Majumdar. “We have one asset left that would potentially add another three DPI."

For a venture capital firm, DPI is a performance metric that measures how much money they return to their investors. A DPI higher than 1.0x means that investors made a profit on the money they put into the fund. So, a higher DPI is better for a VC firm, in terms of capability and credibility, while for investors they make a larger profit on the money they put in.

“While it's too early to tell for our second fund, our internal calculations show that it's likely to return 4-4.5x," Majumdar said.

Also Read | Indian space startups have run into a talent hurdle

Deeptech's time to shine

This year, several deep tech venture capital firms have been raising more funds than they have in previous years. Part of this can be attributed to macro-economic tailwinds like the world's decision to shift away from the Chinese supply chain.

The other part is that several generalist funds have entered the ecosystem. This in turn has allowed deep tech firms to focus on raising larger funds in order to begin providing the ecosystem with more growth-stage capital, something it was sorely lacking in previous years.

Generalist funds like Accel and Elevation Capital have made a push into deep tech this year. Even the deep tech-specific firms are having a moment this year, with some of the largest fund creations this year.

Speciale Invest recently raised its largest fund to date, a $70 million Fund III. Debutante Yali Capital has raised $104 million in its first fund. Other deep tech-focused funds include IIMA-CIE's Bharat Innovation Fund II, which is raising $150 million and targeting pre-series A and series A investments, and Mela Ventures, which is targeting $117 million for a new fund, according to data platform Venture Intelligence.

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