Pentathlon Ventures, an early-stage B2B SaaS-focused venture capital firm, on Tuesday, said it has launched its second fund with a target corpus of Rs 450 crores ($54.4 million).
The fund will back 25 startups in sectors across enterprise digital transformation, e-commerce enablement, fintech, Vertical SaaS, applied AI, sustainable tech, and health tech, in the B2B SaaS space.
Pentathlon Ventures, which invests between pre-seed and Series-A, said it is raising capital from a mix of domestic and global limited partners for its second fund.
Founded in 2020, Pentathlon Ventures raised $10 million in 2021 for its maiden fund and invested in 23 startups including Deeptek, Rezolve, Spyne, Dista, TurboHire and ShopSe, among others.
“The revenues coming from India-based B2B startups are expected to grow 25 times in the next 8 years. With an impressive 50% faster time to revenue, better revenue predictability, and solid gross margins ranging between 70-80%, it presents extraordinary prospects of building sustainable businesses,” Pentathlon Ventures managing partner Sandeep Chawda, said.
Pentathlon Ventures’s fund launch comes even as private equity and venture capital investments into Indian startups have been on a downward trajectory after hitting a peak in Q3 2021.
Early-stage transactions, however, have largely remained unscathed by the funding winter and continued to dominate deal volume in Q2 2023. At 89, deal volume in Q2 was also up 17% from Q1. Pre-seed and seed-stage deals cumulatively raised $192.7 million in the quarter, up 67% from Q1, according to data from DealStreetAsia DATA VANTAGE’s India Deal Review: Q2 2023 report.
Last month, early-stage venture capital firm Veda VC hit the first close of its $30-million (Rs 250 crore) fund with investments from family offices and startup founders.
There has also been a rise in investor interest in the SaaS sector. A report by Stellaris Venture Partners and International Finance Corporation claimed that Indian SaaS startups that integrate AI into their work could create $500 billion in market value by 2030.
In July, Together Fund hit the first close of its $150-million second seed fund to invest in software-as-a-service and AI companies in India. Earlier this year, Nexus Venture Partners, which has backed unicorns like Unacademy, Postman and Delhivery, closed $700 million in a new fund to invest in sectors including AI and SaaS. Separately, US-based Golden Sparrow launched a separate fund to invest in AI and SaaS startups in India.