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Pune-headquartered Pentathlon Ventures is looking to build its $55 million (about Rs 450 crore) Fund II portfolio on the back of second-time founders, focused on building solutions for digital transformation, AI and healthtech.

The firm, which announced the first close of its Fund II in September 2023, has started the process of deploying capital from the new fund and will back around 25 startups. 

The fund invests in pre-seed to pre-Series A rounds, and it has increased its cheque size from an average of $300,000 in Fund I of Rs 77 crore to $1 million from Fund II. 

It will deploy the remaining capital in follow-on rounds in select companies in the Series A and B stages. The fund will aim for exits in the Series B to Series C stage through secondaries or acquisition opportunities.

“We would like to double down on investments from the new fund, lead rounds, and have higher equity in the startups we back,” Sandeep Chawda, Managing Partner at Pentathlon Ventures, told YourStory.

“We are an industry-agnostic fund, but two prominent themes seem to do well for us. One is the digital transformation business across sectors. The second is technology products, such as ecommerce enablement and others. We see AI and applied AI becoming a part of these offerings,” he added. 

Fund II will focus on business-to-business (B2B) SaaS startups with paying customers. “We come in when a company has $100,000-$200,000 in revenue and has paying customers. We help founders with product-market-fit (PMF) with the domain knowledge and experience we bring to the table,” Gireendra Kasmalkar, Managing Partner at Pentathlon, told YourStory. 

Founded in 2020 by industry veterans Chawda, Kasmalkar, Madhukar Bhatia, Saurabh Lahoti, Hemant Joshi, and Shashank Deshpande, Pentathlon Ventures closed its Fund I in 2021. 

Its portfolio of 23 startups from the older fund includes omnichannel insurance distribution channel Riskcovry, WhatsApp marketing solution QuickReply.ai, and cross-border payments company Fable Fintech, among others. 

Pentathlon has also recorded an exit from its Fund I in corporate travel expense management platform Tripeur, which was acquired by US-based corporate travel platform Navan in April 2023. 

The firm also hosts the GTMDialogues programme to build a community of SaaS startups seeking mentorship and guidance on go-to-market strategies and other aspects from industry leaders. 

Despite the macroeconomic conditions, Pentathlon Ventures believes that there is enough capital in the ecosystem to be deployed in early-stage bets. The firm also has a US-based feeder fund to onboard HNIs from the US. 

“The US-based LPs (Limited Partners in a fund) are looking for investments in an economy they can take maximum optimism from. Our first close was backed by successful entrepreneurs within India and abroad, taking our thesis of for and by the entrepreneurs ahead,” said Kasmalkar, adding that this will help its portfolio companies benefit from the expertise.