Sauce VC logs final close of third fund at Rs 365 crore

Consumer-focused venture investor Sauce VC has made the final close of its third fund at Rs 365 crore, against a target corpus of Rs 250 crore, said its founder Manu Chandra.

The Delhi-based fund, which has backed several new-age brands such as luggage maker Mokobara, healthy snacking company The Whole Truth and petcare firm Supertails, has raised capital from Infosys co-founder Kris Gopalakrishnan’s family office Pratithi Investments, Marico promoter Harsh Mariwala’s Sharrp Ventures, Singularity Ventures and Saison Capital.

Almost 95% of the capital has been raised from domestic investors, with nearly 80% being from existing sponsors of Sauce VC’s previous funds.

In May, ET was the first to report that Sauce VC had floated its third, through which it was looking to 12-15 consumer brands in the early stages.

Chandra told ET that the firm received demand for subscriptions amounting to about Rs 700 crore.

“We were unable to accommodate a lot of new investors as we had to prioritise existing limited partners (LPs, or sponsors of a fund)...while it is tempting, we decided not to accept more capital than we can deploy in a disciplined way, while staying true to our stated strategy,” he said.

Sauce VC’s first fund, which closed in 2019, raised Rs 60 crore, with the second vehicle in 2021 snagging a Rs 158 crore corpus. The firm also racked up a Rs 260 crore continuity fund to back winners from its earlier vehicles.

“We’ll continue to take pre-seed, pre-revenue bets… with average cheque size of around Rs 5 crore, and we will reserve about 75% of the fund for follow-ons,” Chandra said.

While the fund will look to make 12-15 investments, it will identify five-six companies to double down on through follow-on investments. From its fund-III, Sauce VC has already made investment commitments to four transactions – in segments such as apparel, baby care, personal care and veterinary care.

“We have a very strong pipeline and, as we have done in the past, we will back a mix of established promoters like at Hocco Ice Creams and Foodkraft along with newer age founders like those of Kreo and Perfora,” said Yash Dholakia, partner, Sauce VC.

Sauce VC’s new fund comes at a time when the direct-to-consumer segment is seeing growing interest from risk capital investors, including tech-focused firms.

Many other consumer-focused funds have raised capital in the past few years. These include DSG Consumer Partners, which raised its fourth fund in October 2023 with a corpus of $114 million (about Rs 950 crore), and Fireside Ventures, which closed its third fund of $225 million (about Rs 1,800 crore) in October 2022.