Singularity Growth, an operator-investor-led growth PE platform, has announced the first close of its second fund – Singularity Growth Opportunities Fund II – at INR 500 Cr.

Singularity’s second fund has a total corpus of INR 1,500 Cr. 

Speaking to Inc42, Yash Kela, founder and chief investment officer at Singularity, said the PE firm is looking to close the fund in the next two quarters.

Talking about the firm’s investment strategy, Kela said Singularity typically has a few sub-strategies when it comes to capital deployment. It deploys up to 20% of the corpus in growth stage startups, another 20% for pre-IPO companies, and about 40% of the corpus is for growth equity for companies where it has held stake for around four years. 

“Another 20% of our corpus is focussed on what we call operator VC where we are taking significant minority positions in three-four companies. Over there we target to work closely with the management team and that is about a seven-year hold for us where we target 10X kind of an outcome,” Kela explained.

Singularity Growth Opportunities Fund II will also deploy the corpus in a similar manner. The firm is targeting investments of INR 75-INR 175 Cr in around 14-16 startups. 

“This strategy helps us deliver the fund back in a shorter time frame because the 40%, which is the first two sub-strategies, gives us 3X kind of an outcome in two-and-a-half years,” said Kela.

Founded in 2021, Singularity is led by Kela and is promoted by former Reliance Capital executive Madhusudan Kela-founded family office Singularity Ventures, which began operations in 2016. Singularity has so far invested in startups like mCaffeine, Exotel, WebEngage, XYXX, and Lohum Cleantech. 

Singularity is focussed on consumer, manufacturing, enterprise software, and financial services.

Its first fund of INR 560 Cr was launched in 2021 and marked its final close in March this year. The fund invested in 17 companies, including the likes of All-Cargo Logistics and Jana SFB.

From its Fund II, Singularity is looking to majorly invest in new companies. Without giving further details, Kela said that the fund would invest in a four-wheeler OEM and an apparel platform.

“About 70% of the fund will go into companies which earn a revenue between INR 150 Cr-INR 600 Cr,” he added.

The development comes at a time when the Indian startup ecosystem is still reeling under the impact of the ongoing funding winter. 

As per Inc42’s report ‘Indian Startup Funding Report Q3 2023, startup funding stood at $1.7 Bn in Q3, the lowest in the past three quarters and down 43.8% year-on-year (YoY).