The venture capital firm Avataar Venture Partners has announced the opening of Fund II with a target size of $350 million. The fund focuses on SaaS and B2B firms.
Mohan Kumar and Nishant Rao founded Avataar in 2019, and it has already raised $400 million, which is made up of a $300 million Fund I and a $100 million top-up fund. It has invested in firms like RateGain, Capillary, and CRMNext as well as unicorns like Amagi and ElasticRun.
Avataar claims that the opening of the new fund demonstrates the enormous market opportunity in the B2B technology and SaaS sectors, which have withstood the financial winter well. It has already begun making investments from its new fund and is in talks with businesses about financing their early expansion rounds.
Avataar Venture Partners to tap growing B2B, SaaS sector for investments
Mohan Kumar, Managing Partner, Avataar, said, “This is a great vintage to invest in SaaS—the unrealistic hype in the market is gone, favouring founders with superior execution and profitable business models. In general, we’re proud to see that Indian SaaS companies are able to build global businesses far more efficiently—they spend less than half the amount of money for every dollar of ARR (annual recurring revenue) earned compared to global peers.”
With an ARR of $10 million or more, Avataar invests $10 million to $50 million in startups and aids in their scaling beyond $100 million to $150 million in ARR.
Nishant Rao, Founding Partner, Avataar, said, “Three out of nine Avataar companies are already past $100 million ARR/$1 billion GMV, with another three to four on track to hit the milestone in the next couple of years.”
According to a recent EY-CII report, the Indian SaaS market is expected to grow multi-fold by 2025 to account for almost 7% to 10% of the global SaaS market, from 2% to 4% now. Industry data also shows that about 70% of the 20 Indian unicorns in 2022 are B2B companies.
The VC fund has said that it has made its first close with institutional investors from the US, Europe, and the Middle East.
