VSS and SIDBI to join Kaalari’s reduced-to-half fourth fund; ex KPMG India head join as partner

It’s very rare that a large VC firm ends up raising half of its previous corpus. Such instances only happen when existing limited partners (LPs) back out and the VC firm is unable to convince fresh LPs for the new fund. This seems to be the case with the homegrown VC firm - Kalaari Capital.

Amidst departure of several partners, Kalaari is targeting a $120-$150 million worth fourth fund. According to a Mint report, the VC firm is likely to onboard Small Industries Development Bank of India (SIDBI) as a limited partner. As per Entrackr’s sources, HNIs form India including Vijay Shekhar Sharma will also join kalaari new fund as limited partner.

Sources indicate that some of the existing LPs in third fund aren’t investing in the upcoming fund. Two weeks ago, however, Vani Kola, Managing Director of Kalaari had vehemently denied that any existing LPs is backing out when Entrackr sent her detailed queries over email.

We have again sent queries to Kola and Sharma’s PR to comment on the developments, and will update the post as soon as responses come in.

Kalaari used to be one of the hottest home grown VC firm with companies like Snapdeal, Urbanladder, Industrybuying, Rubique, and Truweight and several others in its portfolio. While the VC firm had made 6X to 7X return on its investment in Kunal Bahl led e-commerce marketplace, gaining returns from other aforementioned companies will be challenging as they have been struggling to raise follow-on rounds.

The VC firm has also been grappling with series of top level exits. Former senior executives Sumit Jain, Bala Srinivasan, and Prashanth Aluru had moved from the company while several reports surfaced about probable movement of another Managing Director -  Rajesh Raju.

To cope up with churn at top level, Kalaari is reportedly roping former KPMG India head Sreedhar Prasad as its partner, outlines the Mint report. Prasad who used to lead consumer markets and internet businesses at consulting major, has joined the VC firm this month.

While the exact decision for raising a relatively small fund is yet to be known, existing LPs seem dissatisfied with the fund’s performance and movement of managing partners. Since Kalaari is resorting on local LPs for the upcoming fund, it would be interesting to see who else (besides, SIDBI and Sharma) join the VC firm’s fourth fund.

Update: Vani Kola, Managing Director, Kalaari Capital had strongly denied that Sharma and SIDBI becoming part of upcoming fund as well as movement of Raju, and the firm eyeing smaller fundsize in a detail email response.