Back News / Sixth Sense Ventures increases size of second fund on rising interest; close at Rs. 500 crore

Sixth Sense Ventures increases size of second fund on rising interest; close at Rs. 500 crore

November 1, 2018

MUMBAI: Early-stage consumer-focussed venture capital firm Sixth Sense Ventures has closed its second fund at Rs. 500 crore in just 10 months since launch. It had originally set out to raise Rs. 250 crore for the fund, with a greenshoe option of an additional Rs. 100 crore, but unprecedented interest in the space saw the venture capital firm go back to the market regulator seeking to expand the size of the fund.

Sixth Sense Ventures’ second fund counts the Ministry of Commerce as its anchor investor, with an investment of Rs. 50 crore into the fund. The fund has raised capital also from several marquee consumer companies, Indian pharma companies, family offices, and wealthy individuals.

“We are one of the very few venture capital firms to have a 0% management fee structure for our second fund, which means we won’t charge our investors (limited partners) if we don’t make money for them,” chief executive Nikhil Vora told ET. “Since April, we have made six investments from the second fund and will close another two by the end of the year.”

The firm has deployed about one-third of the fund’s capital so far this year.

India’s consumer brand space has seen heightened interest with even non-consumer focussed investors doubling down on the space.

This year, early-stage consumer-focussed funds Fireside Ventures and Saama Capital too have raised capital, with corpuses of Rs. 340 crore and $100 million (about Rs. 7,300 crore at current exchange rate), respectively.

Sixth Sense Ventures is looking to invest across 15-20 companies through the life of its 7-year fund at the pre-series A and Series A stages, with an average investment of Rs. 15-20 crore in each portfolio company. The firm is also open to widening the scope of investment to Rs. 30 crore in the case of outliers. “Any business that has a long curve on the customer, i.e., stickiness, will be an area of interest. Consumer companies, where the lean on a consumer is long and the ability to disrupt that market is huge, are what we are excited about,” said Vora. To this effect, Sixth Sense is looking to invest in areas such as education, consumer contracting and contract manufacturing. It counts ed-tech firm Eupheus Learning,supply chain solutions company LEAP, and holiday accommodation firm Saffron Stays among its investments from the second fund. For the second fund, Sixth Sense is looking to set aside about 20% of the corpus, or Rs. 100 crore, for follow-on investments and another 20% for publicly listed companies. Sixth Sense Ventures said it has deployed its entire first fund of Rs. 120 crore across 10 companies and garnered an internal rate of return (IRR) of 45%. The first fund is likely to return all the capital to its investors by March, four years ahead of its planned timeline, according to the company.