Kae Capital, an early-stage fund floated by angel investor Sasha Mirchandani, has closed its debut fund at $25 million which has seen participation from fund of funds, venture capital firms, entrepreneurs and fund managers. The fund had been oversubscribed nearly twice the target amount and it had to return $20-25 million in capital, said Mirchandani.
Kae already has a portfolio of three companies and is looking to expand that to a total of five in the coming weeks. It has given term sheets to a payments company and a financial services firm.
Mirchandani, co-founder of Mumbai Angels and former India head of the US-based VC firm BlueRun Ventures, said, “Fundraising was a long-drawn process. It took us 18 months to raise the fund since this is a new asset class.â€Mirchandani has been personally making early-stage investments for over a decade.
Convincing fund of funds to tweak their typical deal size for the seed-to-early-stage fund also took time. “Since it requires smaller ticket size commitment from Limited Partners (LPs), it took us time to convince them,†he added.
Bulk of the $25 million raised came from global fund of funds like Morgan Creek Capital Management (which also anchored Ajay Relan’s CX Partners), Axiom Asia Private Capital, Squadron Capital and Capvent. The remaining amount came from a set of four venture capital funds – Sequoia Capital, Omidyar Network, SAIF Partners and an undisclosed firm.
Family offices, individual investors and entrepreneurs like InMobi founder & CEO Naveen Tewari, Pangea3’s Sanjay Kamlani, Myntra’s Mukesh Bansal, Kedaara Capital’s Manish Kejriwal and Fame India’s Shravan Shroff are also investors in the fund.
According to Mirchandani, LPs still like the venture capital asset class in India but many are now in a wait-and-watch mode before they make their commitments.
Kae Capital will now look to build a portfolio of 15-20 companies over the next two-and-a-half to three years. The fund will initially invest $200,000-$500,000 in startups and then take the overall commitment to $3-$3.5 million across new rounds.
For instance, Kae, along with Sequoia Capital, invested $1 million in the seed round for online health store HealthKart.com in April 2011 and then participated in the recent $7.5 million second-round funding.
Other portfolio companies include mobile content firm MoJo Entertainment and an undisclosed tele-computing firm.