TheNFAPost Podcast

Avataar Capital Management, a leading venture capital fund that focuses on business-to-business and enterprise software space exclusively, raised $100 million as part of its initiative to further expand its best portfolio companies and invest in a few new companies selectively.

The investment company was set up in 2019 by Nishant Rao and Mohan Kumar. While Nishant Rao worked as Chief Operating Officer at Saas unicorn Freshworks and Mohan Kumar worked as a partner at Norwest Venture Partners India. The founders began Avataar by acquiring secondary stakes in half a dozen companies from Norwest for $300 million.

The $100 million funds is the second fundraised by Avtaar from HarbourVest Partners LLC. Avataar had raised its fund 1 led by HarbourVest Partners LLC has come in as the single Limited Partner (LP), or investor, in the $300 million (Rs 2,129 crore) venture capital fund in 2019.

Expressing happiness over the development, Avataar cofounder and managing partner Mohan Kumar said the fact that the company’s new LPs have trusted us with additional capital in less than a year and half of being live with Fund1, and despite purely remote interactions during the pandemic.

“We have raised add-on capital from our existing as well as new investors (LPs). We see opportunities to invest in SaaS companies raising growth capital, B2B marketplaces and B2B2C education and health technology companies,” he said in an interaction with The Economic Times.

LPs or limited partners are the people who invest in venture and private equity funds- including financial institutions, family offices and university endowments. Avataar was set up in 2019 by Kumar, a former partner at Norwest Venture Partners India, and Nishant Rao, former Global COO at SaaS unicorn Freshworks.

The funding company started by acquiring secondary stakes in half a dozen companies from Norwest for $300 million. Besides spa software firm Zenoti (now a unicorn), Avataar took stake in logistics firm ElasticRun and Capillary- which helps businesses manage marketing and customer engagement.

Its other investments include RateGain, which provides software to the travel and hospitality industry, and SenseHQ, a talent engagement and communication platform for the staffing industry. The first fund was raised from HarbourVest- a global specialist in secondary deals.

According to Arvian Research, Avataar continues to invest from this fund to invest $10–$30 million in B2B and SaaS companies that have at least $15 million of Annual Recurring Revenues and are looking to scale globally. “It is
interesting to note that the fund has so far invested around $220 million and has earmarked some capital for follow-on rounds in existing portfolio companies,” said Arvian Research.

The fund also finds rising interest for enterprise software firms- seen as a stable bet for investors because they have recurring revenues from day one and tend to burn less cash than their consumer internet peers.

Avataar Capital is backed a management team led by George Thangadurai, former General Manager/Vice President at Intel Corporation, Sudhanshu Bhasin and Muckai Girish, ex-head of sales and marketing at Juniper Networks.