Fireside Ventures plans to raise $230 million for its fourth fund
Fireside Ventures, a prominent consumer-focused venture capital (VC) firm, is gearing up to raise $230 million (approximately Rs 2,000 crore) for its fourth fund (Fund IV). This figure mirrors the amount it raised for its third fund in 2022. The firm is in the advanced stages of fundraising, with discussions already underway with current and potential limited partners (LPs).
- The venture capital firm has started engaging with both existing investors and potential new LPs.
- These discussions focus on raising capital for its next fund, as it seeks to expand its investor base.
- Fireside is keen on broadening its network of investors, particularly seeking foreign LPs to gain exposure to India’s growing startup ecosystem.
Fireside has mainly raised funds from domestic LPs in the past, but this time, it intends to attract more international investors. The firm aims to increase its global reach while contributing to the expansion of its brand recognition.
SEBI registration for Fireside’s fourth fund
Fireside Ventures has also applied for registration with the Securities and Exchange Board of India (SEBI) for its fourth fund, as per regulatory filings. While the firm is in the process of securing its registration, it has not yet announced a timeline for the first close of the fund.
- SEBI registration is a critical step for ensuring compliance with regulatory frameworks in India.
- The announcement of the first close will mark a significant milestone in the fundraising process.
This new fund will be the largest in Fireside Ventures’ history, following the trajectory of its previous funds.
A look at past fund sizes
Since its inception in 2017, Fireside Ventures has progressively increased its fund sizes. The firm raised:
- $52 million for its first fund in 2018.
- $118 million for its second fund in 2021.
- $225 million for its third fund in 2022.
The size of its fourth fund is expected to be similar to its third, reinforcing its consistent approach to capital raising.
- 53 brands have been backed by Fireside Ventures, including well-known companies like Honasa Consumer, Boat, Yoga Bar, and The Sleep Company.
- The firm’s total assets under management exceed Rs 3,000 crore.
Industry trends in venture capital fundraising
Fireside Ventures is raising its fourth fund at a time when many other venture capital firms are also actively pursuing new investments. Notably, several major VC firms have launched their fundraising efforts this year, including:
- A91 Partners, which raised $665 million for its third fund.
- Accel, which secured $650 million for its eighth India-focused fund.
- Bessemer Venture Partners, which raised $350 million for its second India-focused fund.
The overall fundraising environment reflects the growing interest in India’s startup ecosystem and the increasing competition among VCs.
Strategies of different VC firms
While several VC firms have raised new funds, the strategy for each firm varies. For instance:
- Bessemer and A91 have increased the size of their funds compared to previous rounds.
- Accel, Fireside, and others have chosen to maintain their fund sizes, aiming for stability rather than aggressive expansion.
As one source pointed out, the larger the fund, the greater the pressure to deploy capital and meet return expectations. By maintaining a steady fund size, VCs can be more realistic with their return projections.
- A typical $300 million fund would aim for 5X returns, translating to $1.5 billion in total returns to meet the top-tier fund criteria.
- However, achieving such high returns is not easy, which is why many VCs prefer to keep their fund sizes in check to avoid unrealistic goals.
This cautious approach to fundraising and deployment could be key for navigating the challenges in today’s investment landscape.
