Nexus Venture Partners closes $270M fund

Third fund for the India-US focused venture fund is the largest since VC launched in 2006

Nexus Venture Partners, a venture firm whose major focus is on India-based technology startups, announced Thursday that it's raised $270 million for its third fund. Nexus, which has already been investing out of the fund for the last three months, plans to continue its investment strategy, which is to focus on Indian startups that want to expand globally, or U.S.-based startups that want to tap emerging markets.

Since Nexus was founded in 2006 by Naren Gupta, the firm has invested in 45-plus investments and has had six exits, including Cloud.com, which was bought by Citrix, Gluster, which was purchased by Red Hat, and DimDim, which was bought by Salesforce. Other companies Nexus has backed include Pubmatic and Snapdeal.com.

Nexus focuses on early-stage investments. "About 85% of our investments are where we were the first institutional investor, and led or co-led the round," said Gupta, who is based in Silicon Valley, in an interview with me. The rest of Nexus' partners are based in Mumbai, India.

Nexus has invested in 15 startups in the seed stage. The typical seed amount is $100,000 to $500,000, said Gupta. Of the new fund, Gupta expects to invest a few million in seed rounds, but there is no hard and set allocation for that stage. As for Series A, Nexus typically invests between $2 million and $5 million, and more than $30 million over the life of a company.

India is a fairly hot market for startups as some major venture firms have a presence there, from Sequoia Capital, Accel Partners, Matrix and Canaan. But total venture investment is relatively small, with some $300 million to $400 million invested in startups, according to Gupta. That compares to between $20 billion and $30 bilion in venture financing invested in US startups annually. 

As my colleague Steve Loeb pointed out in an earlier piece regarding Sequoia Capital's recent fundraising efforts for three early-stage funds, venture capitalists have been actively raising funds this year.  

Kleiner Perkins Caufield & Byers closed a $525 million fund In May. In April, early-stage venture capital firm First Round Capital announced that it was going to raise its fourth fund, with a target of $135 million, while Berlin-based Earlybird raised a $100 million fund. In March, Groupon investor NEA filed with the SEC to raise $2.3 billion, while DST, one of Facebook's biggest investors, was looking to raise $1 billion.

Andreessen Horowitz, also based in Menlo Park, secured a $1.5 billion fund in January, announcing it had raised $2.7 billion in three years. While it has only been around since 2009, Andreessen Horowitz is already a top VC firm, raking in siginificant management fees.

In June, Khosla Ventures announced a new fund for an undisclosed amount, while Madrona Venture Group closed a $300 million fund.

In the second quarter of 2012, 38 VC firms raised a total of $5.9 billion, according to the National Venture Capital Association.