Venture capital firm Stellaris Venture Partners has closed its third India-dedicated fund at $300 million, making it one of the quickest scale-ups for a domestic early-stage firm focused on seed and series A rounds.
A backer of direct-to-consumer personal care brand Mamaearth and software-as-a-service platform Whatfix, Stellaris plans to use the capital to invest in 25-30 startups across sectors such as consumer technology, enterprise software, artificial intelligence and financial services.
Founded in 2017 by three former Helion Venture Partners executives Ritesh Banglani, Alok Goyal and Rahul Chowdhri, Stellaris is part of a new breed of funds that emerged after the first bull cycle in India’s startup ecosystem. Its first fund was at $90 million with the second fund seeing a sharp increase to $225 million.
Speaking to ET, Banglani said the size of the third fund was in line with what it had planned. “For the strategy that we’re pursuing, which is seed and Series A in India…with significant follow-on reserves, we feel $300 million is the right size for us. We had significantly more interest but ultimately, we have to return the fund and provide a good IRR (internal rate of return) to our LPs (limited partners, or sponsors of a fund),” he said.
While Stellaris’ first fund raised a large share of domestic capital, the latest fund’s corpus mainly has commitments in US dollar-denominated capital. The sponsors include university endowments, foundations, pension funds, and funds of funds, Banglani said.
Public market focus
For Stellaris, Mamaearth, which went public in November 2023, has been a fund returner. On an investment of Rs 25 crore, the VC firm realised around Rs 800 crore in cash exits so far and is presently sitting on an unsold stake of more than Rs 200 crore.
Banglani said Whatfix is the next potential candidate in its portfolio to go public. In September, the Software-as-a-Service (SaaS) firm closed a $125 million funding round at $900 million valuation. Stellaris had led Whatfix’s $3.6-million Series A round in 2017 at a valuation of $12.3 million, according to Tracxn.
“A little further down the line, Propelld, which is an NBFC (non-banking financial company) in the education lending space could be a candidate for going public as well,” Banglani said.
“We believe in investing in businesses with sound economics. Typically, a venture portfolio will have 10-15% winner companies, and of those, only a few will be public market candidates. We are happy that in our Fund-I portfolio of 19 companies, we can already see three candidates for public markets (Mamaearth has already gone public), and there are at least four irons in the fire that have the potential to grow big in the next few years,” Banglani said.
Without elaborating, he said Fund-I delivered returns and distributions that places it in the top decile of venture funds globally.
Future steps
Chowdhri said Stellaris will remain focused on making early-stage investments.
Founded around the time several new VC firms were emerging in India, Stellaris is a part of the cohort including 3one4 Capital, deeptech investor Speciale Invest, and consumer-focused investor Fireside Ventures.
We strongly believe in having focus and expertise which we can apply repeatedly, Chowdhri said. ” Both these things mean that we don’t have any intent of moving out of early-stage investments… We feel that a lot will happen in the early stages and large outcomes will get created over the next two decades. We don’t have any intention to become multi geography or multistage,” he added.
While Chowdhri has been leading consumer investments, Banglani has looked at Stellaris’ financial services bets with Goyal specialising in enterprise software investments.
The firm has elevated principal Naman Lahoty to the position of partner who joined Stellaris in 2019 to focus on consumer investments.
Banglani said the allocation of sectors among the partners could be tweaked for the third fund, emphasising on the need for building a larger investment team to deal with the firm’s growing size.
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