Avataar Venture Partners launches new fund, with a target size of $350 mn

Avataar Venture Partners said the launch of the new fund highlights the huge market opportunity in business-to-business (B2B) tech and SaaS sectors which have been resilient through the funding winter

Avataar Venture Partners, a technology focussed growth-stage investor, said it has launched its latest fund with a target size of $350 million. The fund had its first close with marquee institutional investors from the US, Europe, and the West Asia. 

Founded in 2019, Avataar said the launch of the new fund highlights the huge market opportunity in business-to-business (B2B) tech and software-as-a-service (SaaS) sectors which have been resilient through the funding winter. 

"In the current market environment, Avataar is uniquely positioned to invest in growth-stage SaaS and B2B Tech companies with $10-30 million ARR (annual recurring revenue),” said Mohan Kumar, managing partner, Avataar.  "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 earned compared to global peers."

Avataar has already started investing from its new fund and is undergoing several discussions with companies raising their early growth rounds, including Series C.

Avataar’s portfolio includes some of India’s top global SaaS companies, including media software unicorn Amagi, travel and hospitality tech firm RateGain, SaaS unicorn for the wellness industry Zenoti. It also focuses on B2B technology businesses serving the Indian market. For example, it is an early investor in ElasticRun, a unicorn which provides B2B e-commerce platform to reach rural India. 

“Avataar has established its specialist operational VC model of working closely with founders who want to scale from $10 million ARR to over $100 million quicker by leveraging the team’s experience of having seen the scaling journey multiple times over,” said Nishant Rao, founding partner, Avataar. “Three out of nine Avataar companies are already past $100 million ARR (and) $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 per cent to 10 per cent of the global SaaS market from the current 2 per cent to 4 per cent.

Industry data reveals that about 70 per cent of the 20 Indian unicorns in 2022 are B2B companies. Indian SaaS companies are considered by investors as the new ‘avatar’ of the IT Services industry – which generated $227 billion of revenue in FY22.