VC Circle | February 17, 2021

Early-stage investor YourNest Venture Capital is set to launch its third fund which could be more than double the size of the last vehicle, two people in the know told VCCircle.

The fund has completed its registration process with the regulator, they said. Called YourNest Innovative Products VC Fund III, it has a target size of $75 million, the people added. The last fund had raised $32 million.

The fund is in talks with its existing pool of limited partners (LPs) to get soft commitments for a significant portion of the corpus, they added. The formal launch of the fund will happen once the approval comes in, the people said.

The fund is likely to back 15-20 companies and the ticket size could be $1 million excluding follow-on rounds, they added.

YourNest is likely to make 3-4 exits from the first fund in the next 6-12 months, the people said.

Sunil Goyal, managing director, confirmed the development.

“Our experience with the two funds launched earlier reaffirms our faith in Indian startups with a global outlook. Two successful exits of product startups have reinforced this belief,” he said.

“In the latter half of the last decade, we saw AI’s emergence, bringing massive disruptions across sectors,” Goyal added.

According to him, the firm will continue to invest in computing and communication technologies that are foundational for a shift towards AI. “Most of these business models are customer-friendly SaaS offerings. The Indian SaaS companies’ revenue is expected to grow 6x by 2025 to over $13 billion, with over 75% revenue from global sales,” he said.

In an interview last year, Goyal had said that the firm doubled down on most portfolio companies in the pandemic.

The VC firm had floated its second fund in 2016. It closed the fund almost one and a half years ago.

The firm has invested in a bunch of companies from its second fund. In September last year, Dozee secured Rs 12.5 crore from investors including YourNest.

Late last year, LightSpeedAI Labs Pvt Ltd, a photonics and computing startup, raised a new funding round led by early-stage investors YourNest and growX Ventures.

On Tuesday, UptimeAI, an artificial intelligence-based predictive maintenance software provider for companies in heavy industries, raised $1.5 million (around Rs 11 crore) in a seed funding round from YourNest and other angel investors.

Meanwhile, the development comes at a time when a bunch of VC firms have either hit the road or are planning to launch funds. Early stage consumer venture capital firm is expected to hit the road soon to raise commitments for its second fund.

In May last year, Sixth Sense Ventures floated a new VC fund.

Other firms which have floated new VC funds in the recent past include Russia’s RTP Global, Parampara Capital, Info Edge (India) Ltd, Wipro Ventures and Mantra Capital.