Avataar Venture Partners, the venture capital fund focussed on SaaS and B2B startups, has announced the launch of Fund II with a target size of $350 million.
The VC fund has said that it has made its first close with institutional investors from the US, Europe, and the Middle East.
Avataar, which was founded in 2019 by Mohan Kumar and Nishant Rao, has already raised $400 million, which comprises Fund I of $300 million and a $100-million top-up fund. Its portfolio of investments include unicorns such as Amagi and ElasticRun and other startups such as RateGain, Capillary and CRMNext.
According to Avataar, the launch of the new fund highlights the huge market opportunity in the B2B tech and SaaS sectors, which have been resilient through the funding winter. It has already started investing from its new fund and is in discussions with companies, raising their early growth rounds, including Series C.
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.”
Avataar invests $10 million to $50 million in startups with an ARR of $10 million and above and helps them scale 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.
