The VC firm, set up by former Mindtree founders Krishnakumar Natarajan and Parthasarathy NS, will back companies in the business-to-business (B2B) segment.
Mela achieved a first close in August 2020 when it mopped up Rs 130 crore from investors.
“The initial target was around Rs 200 crore, but looking at the inbound interest, we increased the fund size to Rs 320 crore,” Parthasarathy told ET.
The government’s fund of funds Sidbi (Small Industries Development Bank of India) contributed a significant portion of the fund, while the rest came from investors such as Nippon India Digital Fund and several family offices and ultra-high net worth individuals (UHNIs), the company said.
Around 90% is rupee-denominated capital, while the rest has come from global investors, Natarajan said.
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“Around 25 CXOs from leading technology firms have also invested in the fund in their personal capacity, which we intend to leverage as our operational expertise to advise portfolio companies. These CXOs will take board positions on behalf of the fund to advise the founders in their area of interest,” Parthasarathy said.
The fund will invest in companies offering B2B solutions in areas such as artificial intelligence, machine learning, virtual reality, internet of things, cloud migration and deep technologies, he added.
The fund has already drawn down around 27% to invest and counts companies such as FirstHive, Voiro, General Aeronautics and Infilect in its portfolio. It has so far invested around Rs 31 crore in these companies.
“We are setting aside around 30% of the new fund to make fresh investments in early-stage companies while around 60% has been earmarked for follow-on investments in these firms,” Natarajan said.
It is expected to invest in three more startups over the next two months, he added.
The company will write cheques ranging from $2 million to $10 million and will look at raising a larger second fund once it fully deploys the current one by the end of 2023, Parthasarathy said.
“We realised that as the B2B opportunity is expanding, so has the expectation of promoters and their hunger for growth. The round sizes have gotten bigger and hence we will be writing larger cheques,” he added. The firm is looking to invest in 14-16 companies from its first fund.
India focused funds such as A91 Partners, Stellaris, Chiratae, 3one4 Capital, Alteria Capital, IIFL PE and Edelweiss are raising larger pools of capital from local investors to back startups.
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