A growth-stage fund with a sharp focus on SaaS and B2B is trying to up the ante from Series C onwards. Can founders find nirvana in Avataar?
Who is a seasoned investor? Is it someone who has backed multiple ventures? Or a veteran who has seen various investment cycles—hypes and bubbles—over decades? Mohan Kumar ticks both the boxes, but what really qualifies him as a seasoned investor is a trait that not many in the investment world possess: Balanced storytelling. He starts with a tale where the protagonist is a founder.
Once upon a time—well, it was in the middle of last year—the startup ecosystem in India found itself in the midst of a crazy funding boom. Kumar, who has spent two decades in leadership and operating roles, including as corporate vice president of Motorola, and has also had stints with two startups, describes the ‘insane’ funding scene. Pre-2018, he first sets the context, the valuation multiples for SaaS companies were in the range of seven to 10 times their revenue. “If you happened to be a market leader, you could even get 15 times,” says the former managing partner at
The findings, when put in the Indian context, meant two things. First, for every $1 of revenue, one should do a maximum of $1 of capital raise. So if one wants to cross $100 million, then one should not raise more than $100 million. Now, in India, Kumar points out, a SaaS company usually has raised $20-$25 million till Series B, and would have had $10-$15 million in revenue. “Avataar decided to cut a cheque size of $30-$35 million,” says Kumar. The money, he adds, would be enough to take such companies past $60 million or $70 million. And the ones more disciplined with capital might also touch $100 million in revenue with the funding. “This was the hypothesis,” he says.