Avendus Launches INR 3,000 Cr Fund To Invest In Late Stage Startups

Homegrown financial services firm Avendus has launched its late-stage ‘Future Leaders Fund (FLF) III’ with a total corpus of $350 Mn (INR 3,000 Cr). 

The Securities and Exchange Board of India (SEBI)-registered category II alternative investment fund (AIF) will also have a green shoe option of up to INR 1,500 Cr. 

Under this, Avendus will make 10-12 investments with an average ticket size of INR 200 Cr to INR 300 Cr ($25 Mn to $35 Mn). 

With an eye on “market-leading businesses and category-defining companies”, the fund will target startups across sectors such as financial services, consumption, digital and technology, healthcare, and manufacturing.

Under the new fund, the firm’s investments will comprise both primary and secondary transactions in companies that have disaggregated institutional investor shareholding. 

In a statement, Avendus said that the corpus will target companies that are distinguished by “deep strategic competitive moats and execution capabilities across market cycles, strong operating metrics and dominant market positions”. 

“… We continue to back differentiated, high-quality businesses with sustainable competitive moats and a clear roadmap to liquidity. The FLF platform aims to deliver consistent, predictable, and repeatable outcomes with reduced portfolio volatility. Our commitment to an investor-first approach ensures a strong focus on liquidity with periodic distributions, a relatively shorter investment holding period, and best-in-class governance standards,” said Avendus FLF’s managing partner Ritesh Chandra.

Chandra, along with his team, will continue to lead the new fund, said the company. 

The investment firm also said that the latest fund will utilise Avendus’ extensive relationships and knowledge bank to access differentiated investment opportunities, adding that the fund will also leverage multiple exit options including secondary exits and sale through public markets to offer periodic liquidity to investors.  

Established in 2019, Avendus Future Leaders Fund partners with other private equity (PE) firms and invests in late-stage startups. The FLF platform’s investor base includes Indian and US-based family offices, HNIs, and domestic institutions. 

It claims to have assets worth INR 1,850 Cr under its management on account of investments made from the previous two funds. Its portfolio companies include Lenskart, Delhivery, VerSe Innovation (Dailyhunt), Licious, Juspay, Zeta, and FirstCry. 

Prior to this, the company closed two other funds under the platform. The investment firm raised INR 375 Cr as part of its first Future Leaders Fund and followed it by closing the second fund under the platform with INR 1,500 Cr in 2022. 

Avendus claimed that while the first fund (FLF I) paid back the entire investor capital ahead of the due date, fund II has made 11 investments till date and plans to deploy its remaining capital over the next few months. 

The company claimed that it made exits from Lenskart and National Stock Exchange of India (NSE), both under its FLF I portfolio, with 4X returns within four years. It also added that as many as four of its portfolio companies were likely to list on the bourses over the period of next six to nine months.

Notably, Avendus has been rapidly deploying its dry powder as apprehensions of funding winter abate. Just two months ago, Avendus FLF reportedly deployed INR 1,100 Cr in Avanse Financial Services, and followed it up by infusing another INR 140 Cr debt in ecommerce rollup startup GlobalBees. 

The development comes at a time when homegrown VC and PE firms are accumulating dry powder in droves. Last year, investors raised more than $5 Bn from limited partners to invest in Indian startups. 

This trend has continued into 2024 as well. Earlier this week, Sauce.vc floated its third VC fund with a target to raise INR 250 Cr. Prior to that, early stage VC fund 9Unicorns rebranded itself to 100Unicorns and launched its second fund with a corpus of $200 Mn. 

In April, Caret Capital and Ev2 Ventures together unveiled their $50 Mn fund to invest in early stage Indian startups. Earlier this year, Norwest Venture Partners also closed its 17th fund, which has India as one of the focus markets, at $3 Bn.