IFC Considers $65M Investment in A91 Partners’ Third Fund

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The International Finance Corporation (IFC), a part of the World Bank Group, is planning to invest up to $65 million in A91 Partners’ third fund. This investment includes $35 million in equity and an additional $30 million for co-investments. A91 Partners aims to raise $675 million, its largest fund to date, to support small and mid-sized companies in consumer goods, financial services, healthcare, manufacturing, and technology. Founded in 2018 by former Sequoia Capital executives, A91 has previously raised $350 million in its first fund and $550 million in its second. The firm IFC has invested in notable brands like Blue Tokai Coffee, Digit Insurance, and Sugar Cosmetics. IFC’s move aligns with the growing trend of Indian VC firms securing large-scale funding, with recent examples including Accel and Bessemer Venture Partners.

1. Understanding A91 Partners and Its Business Model

1.1 Founding and Background

A91 Partners was founded in 2018 by former Sequoia Capital executives V T Bharadwaj, Abhay Pandey, and Gautam Mago. Based in Mumbai, the firm focuses on investing in mid-stage startups across multiple industries. Over the years, A91 Partners has emerged as a significant player in India’s venture capital ecosystem, backing promising companies with substantial growth potential.

1.2 Revenue and Investment Model

A91 operates as a venture capital firm, primarily focusing on mid-sized companies that show high scalability. It raises funds from institutional investors and high-net-worth individuals (HNIs), then strategically invests in businesses, typically in Series B and later rounds. A91 Partners’ investment ticket size ranges from $10 million to $50 million per company.

1.3 Portfolio and Sectors

The firm has invested in a diverse range of businesses across consumer goods, financial services, healthcare, manufacturing, and technology. Notable portfolio companies include:

• Digit Insurance – A fast-growing insurance startup that went public last year.
• Blue Tokai Coffee – A premium coffee brand that received $30 million in Series B funding led by A91.
• Sugar Cosmetics – A digital-first beauty brand catering to India’s millennial consumers.
• Exotel – A cloud telephony and communication software provider.
• HealthKart – A nutrition and wellness e-commerce platform.
• Paper Boat – A well-known traditional Indian beverage brand.
• Plum – A beauty and skincare brand.

2. IFC’s Investment and Strategic Interest

2.1 IFC’s Role in Venture Capital

The International Finance Corporation (IFC) is the private investment arm of the World Bank Group. It focuses on fostering economic growth in emerging markets through equity and debt financing. IFC has been an active investor in India’s startup ecosystem, particularly in businesses that promote financial inclusion, technology innovation, and sustainability.

2.2 Breakdown of the $65 Million Investment

According to the disclosure, IFC’s total commitment of $65 million will be divided as follows:

• $35 million in equity, directly into A91 Partners’ third fund.
• $30 million for co-investments, alongside the fund’s portfolio companies.

This investment aligns with IFC’s strategy of supporting venture capital firms that drive economic development and job creation in emerging markets like India.

3. A91 Partners’ Third Fund and Market Impact

3.1 Fundraising Goals

A91 Partners aims to raise $675 million, making it its largest fund to date. Compared to its first fund ($350 million) and second fund ($550 million), this significant increase underscores its confidence in India’s high-growth startup ecosystem.

3.2 Investment Focus

The fund plans to invest in approximately 15 companies, with each investment ranging between $10 million and $50 million. The primary focus areas include:

• Consumer Goods – Brands with strong direct-to-consumer (D2C) potential.
• Financial Services – Fintech startups and digital lending platforms.
• Healthcare – Healthtech innovations, telemedicine, and wellness brands.
• Manufacturing – Tech-driven industrial solutions and sustainable production.
• Technology – Enterprise SaaS, artificial intelligence, and cloud computing firms.

4. Trends in India’s Venture Capital Ecosystem

4.1 Increasing VC Fundraising Activity

The Indian venture capital landscape is witnessing a surge in large-scale funding rounds. In January, Accel announced a $650-million India-focused fund, while Bessemer Venture Partners allocated $350 million for its second India fund.

4.2 Rise of Sector-Specific Investments

Venture capital firms are increasingly focusing on specialized sectors. For example:

• Fintech startups are receiving significant backing due to India’s digital payments boom.
• D2C brands like Sugar and Plum are thriving due to rising e-commerce adoption.
• Healthtech platforms are gaining traction amid increased healthcare digitization.

5. Learning for Startups and Entrepreneurs

5.1 Importance of Strategic VC Funding

Securing investments from reputed firms like A91 Partners and IFC can provide startups with not only capital but also industry expertise, mentorship, and global networking opportunities.

5.2 Sector-Specific Growth Potential

Startups operating in high-demand sectors like fintech, D2C brands, and enterprise SaaS have a higher likelihood of attracting VC investments. Understanding market trends and aligning business models accordingly can increase funding prospects.

5.3 The Role of Large-Scale Funds

With larger VC funds emerging, startups have greater access to capital. However, securing funding requires robust financial planning, a clear growth trajectory, and a scalable business model.

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