RPSG Capital to raise Rs 500 Cr second fund in 2022

The early-stage venture capital firm, which has made 12 investments from its Rs 100 crore first fund, plans on increasing the cheque size with the new fund, which will be anchored by the RPSG Group.
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Early-stage direct-to-consumer (D2C) brands focused venture capital fund, RPSG Capital Ventures, has hit the road for the soft launch of its second fund of Rs 500 crore.

In a departure from Rs 100 crore Fund I, which was backed by the RP-Sanjiv Goenka (RPSG) Group, the second fund will also look at domestic institutions and High Networth Individuals (HNIs) from India to come on-board as Limited Partners (LPs), Abhishek Goenka, Head and Chief Investment Officer, RPSG Ventures, told YourStory.

The fund has made 12 investments so far from its first fund, which was announced three years ago. It has invested in the likes of healthy snacks and breakfast brand True Elements, customised Ayurvedic beauty brand Vedix, personal care brand mCaffeine, and plant-based nutraceutical brand Plix, among others.

“RPSG Group will continue to be the anchor investor in the fund, but we haven’t taken a call on the percentage of the amount other LPs will contribute. With the new fund, the cheque sizes can also be stretched up to $3 million,” says Abhishek Goenka.

He added that the focus will continue to be on D2C brands, with the lifecycle of the fund remaining the same. Typically, RPSG Capital takes anywhere between 10 to 20 percent stake in companies it backs and will continue to do so going ahead. The second fund will announce its first close by mid-2022, says Abhishek.

RPSG Capital, which hasn’t exited any of its investments yet, is open to partnering with Indian and global ecommerce roll-up models for exits going ahead.

“As a fund, we look at two scenarios – number one being a part of the IPO story of our portfolio companies, which might do exceptionally well. The second scenario is where we can partner with a much larger company, whether Indian or a global major, which can help grow the company. We are open to both the options,” he says, adding that the fund expects to see exits between four to seven years of its lifecycle.

With the entry of global ecommerce roll-up model Thrasio in India and homegrown companies like Mensa Brands and GlobalBees turning unicorns, the D2C space will continue to attract investor attention this year too, says Abhishek.

“Investments in D2C will sustain for sure as from an investor perspective, it was a new sector for many of them. Like other sectors, this too will go back to fundamentals where investors will be giving a lot more weightage to unit economics for sustainable growth. I also foresee a lot of investment going into the ecommerce infrastructure space, especially for Tier II and III cities,” says Abhishek.

The fund is also looking at providing support to early-stage D2C brands with the launch of its accelerator program, Base Camp, in December 2021, in partnership with Little Black Book, to encourage companies in the space. As part of the program, selected startups will bag Rs 1.5 crore investment apart from mentorship from the fund.

Edited by Megha Reddy

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