Avataar Ventures raises $100 million opportunity fund

Avataar Capital Management, which focuses on the business-to-business and enterprise software space exclusively, said on February 18 that it has raised $100 million to go deeper into its best portfolio companies and invest in a few new companies selectively.

“The fact that our 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, is inspiring,” said Mohan Kumar, co-founder and managing partner at Avataar. 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, former partner at Norwest Venture Partners India, and Nishant Rao, former Global COO at SaaS unicorn Freshworks.

Avataar started by acquiring secondary stakes in half a dozen companies from Norwest for $300 million. These included spa software firm Zenoti (now a unicorn), logistics firm ElasticRun and Capillary- which helps businesses manage marketing and customer engagement. The first fund was raised from HarbourVest- a global specialist in secondary deals.

From this fund, Avataar plans to continue its strategy of investing $10–$30 million in B2B and SaaS companies that have at least $15 million of Annual Recurring Revenues and are looking to scale globally.

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 fund also indicates 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.