Avataar Venture Partners, which has invested in unicorn software firms including Amagi, Zenoti, and others, has launched its second fund (Fund II) with a corpus of $350 million.
The second fund is expected to hit a final close of up to $400 million, founder and managing partner Mohan Kumar told ET.
“We usually back 10-15 companies in a fund and make sure we offer all the help. But we can work with only so many companies at a time and that explains the thesis behind a $350 million fund,” Kumar said. “We might go up to $400 million with this fund but not more than that. We will never be a $1 billion fund, because we won’t be able to service it.”
Over the following 30 months, it plans to invest all of the Fund II capital.
The venture capital firm expects to maintain its investment pace with the second fund, supporting 10-15 new companies, issuing cheques with an average value of $35–40 million, and concentrating on growth-stage businesses.
“We are a B2B fund, and SaaS is a large part of our focus..We ideally come in when a company has $15 million in annual revenues. There are a lot of startups between $5 million and $10 million today who will be in the market to raise funds next year. Until then, the next one year, we see a lot of opportunities in the B2B-tech market, and not SaaS. SaaS will start picking up next year,” Kumar said about the investment opportunity.
Previously, Avataar had purchased shares in six B2B SaaS startups from Norwest Venture Partners as part of a bulk portfolio deal to launch its fund: Appnomic, Capillary, CRMNext, ElasticRun, Manthan, and Zenoti, as per reported by The Economic Times.
“Overall health of LPs depends on public markets, and that has taken a hit. And they are all evaluating where the market is and will be slow to deploy so they aren’t in a hurry. Hence, for even the existing funds raising out there, there have been a lot of re-ups (or existing LPs participating). So, four of our LPs have signed-up for a re-up for our second fund and we are bringing two new global LPs. For now, we are not creating a structure to take money locally,” said Kumar.
About Avataar Venture Partners
Avataar Venture Partners is a growth stage, Operational VC fund partnering actively with brilliant regional Tech-led B2B & SaaS startups to Re-invent, Scale & Transform into successful, enduring global businesses.