48115 - 3one4 Capital IV

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Summary of Investment Information

Project Number

48115

Company Name

3one4 Capital IFSC Fund

Date SPI Disclosed

May 9, 2023

Country

India

Region

South Asia

Projected Board Date

Jun 13, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Aug 25, 2023

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Jun 21, 2023
Signed : Jun 27, 2023
Invested : Aug 22, 2023

Sector

Venture Capital Fund

Project Description

The proposed Project is for an equity investment of up to US$15 million into 3one4 Capital IFSC Fund (the “Fund”, operating as 3one4 Capital). The Fund will focus primarily on seed to series A stage investments in Indian technology-enabled companies across sectors such as digital health, consumer internet, fintech, enterprise and SMB automation, and software-as-a-service.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	15.0

Development Impact

Stakeholders (investee companies): Increased access to early-stage equity and operational value add for technology companies in India: The fund will provide access to equity and value-creation for investees by helping raise follow-on capital, introducing experts into portfolio companies to accelerate growth and leveraging their networks and relationships to enable scale. The fund has demonstrated success with its previous funds. Integration: Increased disruption of key markets through the support of market-disrupting digital business models: The Fund is supporting investees in developing tech-led innovative solutions to disrupt various real sector business models. IFC expects this will increase competitiveness across markets characterized by low productivity, poor efficiency and low competition. The investees’ innovative business models can strengthen supply chains by reducing the role of brokers and intermediaries, improving price transparency, and having a demonstration effect by catalyzing replication from new entrants. In markets where investees grow rapidly and become sizeable market players, innovation at scale can generate large impacts on a market’s competitiveness by pushing traditional players to innovate or reducing traditional incumbents’ market share.

The project has non-financial additionality. Standard Setting: Acknowledging other DFIs are in the Fund, it is expected that IFC will help the Fund Manager improve their Environmental and Social Management System (ESMS) in line with IFC’s Performance standards, in turn improving standards at the investee level. In addition to this, IFC is also working closely with the Fund to help them adopt a gender lens investing approach, including mentorship and training support from IFC through a structured program and help them to develop their gender policies aimed at improving the management of gender outcomes.

E&S Category Rationale / Risks and Mitigation

The project entails a US $15 million investment in 3one4 Capital Fund IV and a US $15 million co-investment envelope. The Fund is expected to invest in seed stage companies and follow-on investments, primarily into low-risk sectors such as early-stage technology startups with a focus on fintech, health-tech, and consumer internet. The key E&S risks and impacts associated with the Fund's investment activities are related to occupational health and safety, and labor and working conditions, among others. Such adverse environmental and/or social risks or impacts will be few, generally site specific, largely reversible, and can be readily addressed through mitigation measures. Therefore, the proposed project has been classified as a Category FI-2 project according to IFC Sustainability Policy. The Fund will not invest in any coal-related activities and higher risk business activities that may include a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or d) significant occupational health and safety risks. The applicable Environmental & Social (E&S) requirements for this project will include the Exclusion List, the host country laws and regulations, and the IFC's Performance Standards (when applicable).

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
3one4 IFSC	India	P-DA- Fund Management Company
Locale AI Inc	India	R-BA- Computer Systems Design and Related Services (System Integration, Custom Computer Programming, IT Services etc.)
Shvasa Inc	India	S-AC- Other Health Services
Smallest Inc	India	R-AC- Other Services (Including IT Enabled Services)
Webless Inc	United States	R-AC- Other Services (Including IT Enabled Services)

The Fund has nominated an E&S Officer. The Fund will be required to (i) develop and implement an E&S Management System (ESMS) including an external communications mechanism (ECM), undertake E&S due diligence of all potential investee companies against the applicable E&S requirements and managing the E&S risks throughout the life of all its investments and apply the IFC Performance Standards where required (e.g., stage B investees). IFC will monitor the Fund's E&S performance, including reviewing the Fund's first three E&S Due Diligence assessments to ascertain its ESMS has been properly implemented in identifying and managing E&S risks consistent with IFC requirements. The Fund will be required to report on its E&S performance to IFC on an annual basis. IFC will review the Fund's E&S due diligence for the first three investments prior to the Fund's investment to support proper ESMS implementation.

Contacts

For Inquiries About the Project, Contact

3one4 Capital
Siddarth Pai
Managing Partner

siddarth@3one4capital.com
Office #1, 5th Floor, 1 Sobha 50, St Mark's Rd, Ashok Nagar, Bengaluru, Karnataka 560001
www.3one4capital.com

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Title & Description	Anticipated Completion Date
Establish SEMS	06/19/2023
Staff Training	06/19/2023

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