Together Fund launches Fund II with total corpus of $150 million

Together’s existing portfolio ranges from first-time founders to experienced entrepreneurs.

Software-as-a-Service (SaaS)-focused venture capital firm Together Fund on July 27 announced the launch of its second fund with a target corpus of $150 million with limited partners across the US and Asia, in what is the latest instance of a VC firm raising money amid a tough macro environment.

“We had been investing in DevTools (Developer Tools), SaaS and a few artificial intelligence (AI)-based startups from our Fund I and now the difference is that AI has come on top. We will continue to focus on the Business-to-Business (B2B) segment and within that AI and SaaS are the main focus areas for us,” said Manav Garg, founding partner of Together and founder of SaaS firm Eka Software Solutions, in an interaction with Moneycontrol.

Together’s Fund II has completed its first close and will continue to invest in seed and series A stages of emerging SaaS startups, with cheque sizes ranging between $1 million and $5 million.

“We have increased our cheque size from Fund I because we will look at investing in Series A rounds now and AI startups require more funds upfront as compared to traditional SaaS firms,” Garg said.

The second fund follows an initial Fund I with a total corpus of  $85 million launched in 2021, dedicated to building and scaling global SaaS startups.

Founded in 2021 as a global fund set up in Mauritius by Nasdaq-listed Freshworks founder and CEO Girish Mathrubootham and Garg, Together follows a founder-first approach to investing.

The VC firm also counts Shubham Gupta, who led SaaS deals at Matrix Partners until last year, and Avinash Raghava, a founding member of SaaSBoomi and former iSpirt and Nasscom fellow, as its founders. In April 2023, Raghava left Together and joined SaaSBoomi as the founding volunteer and CEO.

Together Fund has invested in over 20 founding teams across horizontal SaaS application areas like recruitment, sales intelligence, and marketing and vertical Saas companies in healthcare as well as those creating new categories like cloud for connected devices.

Some of its portfolio firms include DhiWise, SpendFlo, SecureDen and TopLyne.

Focus on AI, Tier 2 and Tier 3 cities

Together’s existing portfolio ranges from first-time founders to experienced entrepreneurs, and includes startups from major hubs like Chennai and Bangalore, to companies in Tier 2 cities like Surat.

“We are generally seeing a large number of SaaS startups emerging out of Tier-III and Tier-II towns. Small cities no longer just mean Chennai, we are seeing a lot of startups from Lucknow, Ahmedabad, Surat and Nagpur…We will be actively looking at startups from these cities as well,” Garg said.

In fact, six of its portfolio companies like Kula, Privado, Revenue Hero, Spendflo, Spry and Toplyne have successfully raised follow-on funding rounds from prominent global investors.

Together is also keen on developer tools and infrastructure covering modern data stack, no code platform, security, and privacy. However, AI will be the key focus area for investment.

“AI startups mean that a startup should solve using AI. Opportunities that earlier could not have access to can now be accessed using AI like Generative AI. There is a whole new world of offerings there and we are excited about it,” Garg said.

Startups in the areas of Text-to-Video, Voice-to-Video, Imaging, and Bharat-based LLMs are emerging and have good opportunities, Garg added.

Investments amid a tough macro environment

The Indian software-as-a-service (SaaS) industry is witnessing a funding slowdown as investments dropped nearly 81 percent to $635 million in the first half of 2023 compared with the massive $3,406 million seen during the same period of 2022, as investors turn cautious towards a sector that’s most affected by macroeconomic pressures.

While the first half of 2022 witnessed the completion of about 147 deals, 2023 saw the number fall to about 70, according to data sourcing and analysis firm Venture Intelligence.

However several investors believe that the second half of 2023 will see more investments, especially in the SaaS sector. In fact, many venture capital firms have recently launched new funds to invest in SaaS startups.

“The launch of Fund II is a testament to Together’s model. We are an operator-led, founder-led VC firm, and given that we are in a highly uncertain environment globally, specialist operators like Together will have a better chance to understand startups,” Garg said.

Last month, Arkam Ventures announced the launch of its Fund II targeting a total corpus of $180 million. Arkam has invested in SaaS Startups like SpotDraft and Signzy.

Similarly, in April, SaaS-focused VC Boldcap launched its $25 million Fund II. Around the same time, venture capital investor Iron Pillar, which has backed the likes of FreshToHome, Uniphore, Servify, and Curefoods, closed a $129-million fund.

In May, Chiratae Ventures, which has invested in SaaS firms such as Active.Ai, Pando and CloudCheery, announced the close of its Rs 1,001 crore growth fund.