Early-stage consumer-focused investor DSG Consumer Partners has closed its third venture capital fund at $65 million, a senior executive of the company said. Media reported on 31 March it had marked the first close of the fund, then planned at $50 million, at $30 million.
DSG had raised its first venture capital fund of $24 million in 2012 and followed it up with a $50 million fund in 2017. It is known for making early bets on hotel chain start-up OYO Rooms, point-of-sale (POS) services provider MSwipe and Raw Pressery cold-pressed juices.
The third fund will invest in seed and Series A rounds of $500,000 to $2 million, and will invest a maximum of 15 per cent of the fund in a company. DSG is also raising its second add-on fund – a fund dedicated to backing the best companies from its own portfolio, as they raise Series B rounds and beyond. Along with the third fund’s close, it has also marked the first close of its add-on fund at $35 million.
Confirming the development, DSG founder and managing director, Deepak Shahdadpuri said, “We have been fortunate to work with some of the best founders building the next generation over the last seven years… I want to thanks our LPs, especially LPS who have backed us from Fund 1 in 2012 when we mooted the idea of launching the first VC fund in India and southeast Asia focussed on consumer brands.”
Funds such as DSG, focused on the consumer segment, have been raising money at an increasing pace, driven by the rise in new disruptive brands that are riding the Indian consumption growth story. Media reported on 21 May that at least three consumer-focused firms, DSG, A91 Partners, and Fireside Ventures are raising funds. While A91, started by three former senior executives at Sequoia Capital, closed its $350 million funds in June, Fireside Ventures is currently raising a $100 million second fund.
These investors are betting on new fast-growing consumer brands that are tapping into rising disposable incomes and the country’s large population of millennials. India’s affluent consumers and households, which earn between Rs 5 lakh and Rs 20 lakh per annum, have contributed to 43 per cent of the Rs 110 lakh crore in annual consumption in the country in 2018, according to a February 2019 report by Boston Consulting Group (BCG), along with Retailers Association of India.