Growth Stage VC Avataar Launches $300 Mn Investment Fund

SUMMARY

Global private equity fund of funds HarbourVest has invested in the fund

Avataar Venture Partners I will focus on B2B and SaaS companies

Average ticket size of the fund investments will be around $10-$30 Mn

Growth stage VC firm Avataar Capital Management has launched its first investment fund of $300 Mn, named Avataar Venture Partners I. For this fund launch, the company has on-boarded a global fund of funds HarbourVest Partners as an investor.

The new fund will focus on making $10Mn – $30Mn growth stage investments into B2B and SaaS companies with a minimum of $15 Mn annual recurring revenues and plans of global expansion.

Avataar is founded by the former partner of Norwest Venture Partners India, Mohan Kumar and Freshworks former COO Nishant Rao. “Avataar was founded on the belief that to successfully build, scale and accelerate the growth of companies, entrepreneurs will need partners with operational action bias,” the founders said in a joint media statement.

Avataar Investment Portfolio

At the fund’s closing, Avataar is said to have already acquired stakes in six B2B SaaS companies from Norwest Venture Partners portfolio including IT operations startup Appnomic, engagement commerce tool Capillary Technologies, customer relationship management software CRMNext, logistics startup ElasticRun, data analytics startup Manthan and Spa & salon management software Zenoti.

Recently in August 2019, Zenoti raised $20 Mn from Steadview Capital. Prior to this in May, Zenoti also raised $50 Mn Series C funding round led by Tiger Global Management.

Also last year, Capillary Technologies raised about $20 Mn funding from Warburg Pincus and Sequoia Capital.

SaaS Opportunity In India

According to NASSCOM, India’s software as a service (SaaS) market is expected to grow 36% annually and touch $3.3-$3.4 Bn by 2022. This growth is expected because of cheaper workforce, abundant talent, mature sales ecosystem, and adoption of deeptech technologies in the country.

Further, according to DataLabs by Inc42, in the period between January 2014 and June 2018, Indian SaaS startups raised $2.79 Bn across 520 deals.

Also, Indian SaaS unicorn Freshworks was recently reported to be working towards an initial public offering (IPO) as early as 2021. The listing is expected to be on New York-headquartered stock exchange, NASDAQ.

This announcement was closely followed by another SaaS company Icertis joining the unicorn club in July 2019. The company has raised $115 Mn in a funding round, led by US-based venture capital firm Greycroft and PremjiInvest, to reach the $1 Bn valuation.

Meanwhile, the oldest SaaS unicorn from India, Zoho has been busy in making new acquisitions and adding fresh line of entreprise offerings including mobile app development platform Zoho Creator, Zoho commerce SaaS platform, sales team focussed conversational AI called Zia Voice, and more.