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Chennai-based BoldCap launched its second fund of $25 million that will exclusively invest in software-as-a-service (SaaS) companies in the early stage. It plans to invest in 15-20 startups over the next 24-36 months.

The venture capital firm will look to invest in 15-20 startups over the next 24-36 months it said in a statement. To date, it has invested or committed investments in four startups including notification infrastructure tool SuprSend and Togai, a pricing infrastructure tool for SaaS companies.

The second fund is backed by fund of funds, a small institution, 4-5 family offices, and global founders and early operators from different companies, the statement read.

“When a company is at a billion dollars, which is probably when it is doing $25 million-$50 million in revenue, it’s typically when we might exit. Until then, we would like to stay on and continue to invest,” says Sathya Nellore Sampath, Founder and General Partner of BoldCap. 

Based on the early signs of traction in the companies it has already invested in, Sampath suggested that there could be a “high possibility” of the launch of an opportunity fund in the next 12-16 months to invest in some of its breakout portfolio companies.

Bold Capital invested about $5 million under its first fund launched in 2021. Its portfolio of 10 companies comprises spend management software Spendflo, contract management and automation software Spotdraft, design to code converter Locofy, and test automation platform TestSigma.

Investment thesis

BoldCap is betting big on business-to-business (B2B) SaaS companies that are in the pre-seed and seed stages. It is planning to deploy its capital in such a way that it will be able to maintain ownership by participating in subsequent rounds of funding up to Series A. Going beyond that point would fall under the scope of a potential opportunity fund.

The VC firm is clear that these should be built in India for the world and not so much for the Indian market given that the latter’s total addressable market is smaller in comparison to countries like the United States.

Sampath emphasises providing strong go-to-market support to SaaS founders going from 0 to 1. “This is a space that a lot of entrepreneurs need support early on, be it finding design partners, or making early introductions to customers, or helping them think through how to pitch their first sales and their pricing models,” Sampath told YourStory.

Vertical SaaS, developer tools, enterprise applications with generative artificial intelligence capabilities and cybersecurity are the main subsets that are on the radar for Bold Capital. 

Experts and investors suggest that the Indian SaaS industry has come of age with the successes of the likes of Zoho and Freshworks and the scaling of a number of companies in different categories with the potential to be billion-dollar businesses in the next few years.

Nearly $5 billion of VC money was been pumped into the Indian SaaS market in 2021 and the market size for this industry is expected to grow five times from $10 billion in 2020 to $50 billion in 2030, according to a report by American VC and private equity firm Bessemer Venture Partners published in July last year.

Sampath was a two-time entrepreneur before donning the investor’s hat.