Sixth Sense Ventures closes Fund II at Rs 500 crore; double the target corpus

Sixth Sense Ventures, a VC that targets early-stage consumer-focused startups, has made the final close on its second fund with Rs 500 crore in pocket.

What is extraordinary about this close is that it is double the amount of target corpus which stood at Rs 250 crore with Rs 100 crore as a greenshoe option. Moreover, the fund close has been made in just 10 months since launch.

The reason that the venture was able to achieve this lied in the fact that Indian consumer space is one of the most lucrative sectors for investment these days, with even non-consumer focused VCs and angels putting a monetary bet on it.

Another fact that contributed to the VCs magnetism was its 0 per cent management fee, whereby the firm doesn’t charge investors if it isn’t able to make profits in return, as per a statement by Nikhil Vora, Chief Executive in his interview with ET.

As far as investors in this second fund are concerned, Ministry of Commerce was the anchor investor, pouring in 10 per cent of the final close (Rs 50 crore). Other investors included family offices, pharma companies, marquee consumer companies, and angel investors.

With this fund, the company is looking to invest in 15-20 companies with ticket sizes of approximately Rs 15-20 crore on an average, or Rs 30 crore in case of stumbling upon any outstanding idea. These are going to be pre-Series A or Series A rounds.

For investment purposes, the VC targets startups in the education segment, contract manufacturing and consumer contracting. It has already deployed one-third of its second fund in companies such as Eupheus Learning, LEAP, and Saffron Stays.

Further, the VC plans to keep 20 per cent of the fund for publically listed companies and another 20 per cent for follow-on investments in current portfolio companies.

While the VC earned a 45 per cent Internal Rate of Return in the first fund, it remains to be seen how this one works out for the firm.