Global LPs are growing wary of helicopter VCs

Siblings Pranav and Siddarth Pai, who founded 3One4 Capital in 2015 to invest in early-stage start-ups, talk to Deepsekhar Choudhury about the rise of domestic venture funds and regulatory roadblocks that hinder their growth. Edited excerpts

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What made you decide to start a venture-capital (VC) firm?

Pranav: When I met a lot of founders, my first surprise was that they all hated raising venture capital. They felt VCs were very robotic. There were only seven or eight business models that the VCs were interested in such as food delivery, ride-hailing or payments. If a founder was doing anything outside that set, they didn't even get a meeting.

That made it clear to me: India needed Indian VCs who were operators. People who had built companies and could actually help founders grow, not just write cheques.

How well are domestic general partners (GPs) competing with foreign GPs for global limited partner (LP) dollars?

Pranav: Every Indian VC had to start with domestic LPs because first-time managers have to build local support in any market. So we first raised from Indian institutions, family offices and corporations. As a result of the returns that we have shown, there is a lot more interest in India now from global LPs. We've raised from American university endowments, European investors, Japanese investors and Singaporean LPs.

The same kind of investors that global firms raise from—we have access to maybe 50-60% of those today. What we don’t have access to at the same level are other nationalities’ family offices, pension managers or sovereign LPs and state pension programmes.