SUMMARY
Iron Pillar had closed its Fund I in 2018 and has invested in over eight startups
Its portfolio includes Bluestone, Testbook and NowFloat, which was acquired by Reliance
Siddarth Pai had previously highlighted that portfolio protection will be the new focus for VCs
As investor pockets get tight due to Covid-19 on Indian businesses, growth-stage tech-focused venture capital (VC) firm Iron Pillar has raised $45 Mn top-up for its first fund of $90 Mn.
The VC has added that three undisclosed global institutions, including a global alternatives investor and one European family office, have invested in the top-up. Iron Pillar is looking to use this top-up to financially back some of its portfolio companies, which are reportedly doing well in the current market conditions.
Highlighting that the current crises have reduced the amount of growth capital available for tech companies in India, Iron Pillar’s managing partner Anand Prasanna, said, “While some may see this as a formidable challenge, we see this as a once in a lifetime opportunity for high-quality tech companies with strong market position… Our top-up fund is a proactive step in that direction to add fuel to our well-performing portfolio companies.”
Iron Pillar was launched in 2017 by former Morgan Creek director Prasanna, former Citigroup India investment banking head Sameer Nath and former DFJ India head Mohanjit Jolly. So far, it has invested in over eight investment firms.
The company’s portfolio includes online jewelry platform Bluestone, edtech startup Testbook, conversational AI startup Uniphore, online marketplace and supply chain startup FreshToHome, and pharmaceutical company Vyome, after-sales service platform Servify and control-intensive products manufacture SEDEMAC. Besides this, Iron Pillar had also invested in Hyderabad-based SaaS startup NowFloat, which was acquired by Reliance Industries in December 2019.
Iron Pillar’s top-up comes at a time when several investors and industry experts have predicted a dry-spell for the Indian investment scenario. Speaking at Inc42’s ‘Ask Me Anything; Siddarth Pai of 3One4 Capital, Siddharth Talwar of Lightbox Ventures and GV Ravishankar of Sequoia India have pointed out the slump in new investments coming about in the Indian startup ecosystem due to Covid-19 pandemic.
With Capital Crunch, Portfolio Protection Only Way Out
Ravishankar has also highlighted that VCs will raise the bar for investments and the companies that do not have a unique model might not get capital anymore. Besides this, entrepreneurs will have to answer some tough questions to VCs and funding rounds may take a little longer than usual to close.
Pai had also elaborated that ‘Portfolio Protection’ will be the new focus for the VC, instead of making new investments. VCs that have raised 50% of the fund target, will invest only 30-40% of this corpus in new deals, while those who have raised more than 50% of the target corpus will stay away from companies with high valuations, reserving almost 70% to 90% of the fund for their portfolio companies.
Meanwhile, VCs that have already drawn out 85-90% of their capital and have few capital reserves would opt for voluntary deductions across the board in order to make their portfolio companies stay afloat, he had added.
