Prime Venture Partners, an early-stage tech-focused fund, has been in India for around a decade. Its first fund of $8 million raised in 2012; second was $46 million (2015); third was $72M (2018) and the ongoing fourth round is around $120 million. It has made over 40 investments so far, including Ezetap, MyGate, Quizizz, Dozee, Tracxn and the latest being Gallabox, a Chennai-based Software-as-as-Service (SaaS) start-up. “SaaS is going to be evergreen for the next 3-5 years,” Gaurav Ranjan, VP of Investments, Prime Venture Partners, told businessline. In this interview, he shares his thoughts on what’s going in the investment world. Excerpts:
SaaS will remain one of the favourite sectors to invest: Gaurav Ranjan, Prime Venture Partners
“SaaS is going to be evergreen for the foreseeable future, maybe a couple of years or maybe five years. B2B commerce – both domestic and cross-border – is also quite hot,” says Gaurav Ranjan, Vice President of Investments at Prime Venture Partners, an early-stage, tech-focused fund.Video Credit: Story: TE Raja Simhan; Video: Bijoy Ghosh; Producer: Darshan Sanghvi.
Your fund at present is your fourth round, right?
Yes. We have been around for a decade and have made over 40 investments. Right now, we are investing out of our fourth $120 million fund. Our aim is close to $300 million across the four funds. The first cheque that we write is between $1–3 million, and we will do follow ups. From the $120 million fund, we will invest in 18 to 20 companies, allocating $5–6 million capital for every company.
Many say things are slowing down in the tech space? Is that so?
There is a lot of talk about things slowing down in the market. While that is true to some extent on the late stage investment and growth and scale of funding, but the early stage has been resilient to the downward trend. We did see investment in early stage companies come down a bit. But, it was because investors were focusing on mid-to-late stage portfolios by helping them navigate the tough times.. But now most investors, including us, are raring to go and invest in good early stage companies. In some portfolio companies, we had to restructure and reprioritise a few things. However, overall, there was not much of an impact in our portfolio.
You recently invested in Chennai-based SaaS start-up Gallabox. How attractive is SaaS as a sector to invest in?
The sector has been a favourite for the last couple of years and we believe it will be so for the next few years. It is both–building in India for India, and building in India for the globe. This year we have made two deals in SaaS, and the sector will remain a favourite.
Chennai is said to be SaaS capital, but we don’t see many deals happening in the city. Why?
Many Chennai based companies are getting funded, which is a hotbed for SaaS, but not many are reported. It may happen that many company founders from Chennai move to Bengaluru because they may find the ecosystem a little better there. I have not seen lesser deals happening in SaaS in Chennai.
For the next 12-18 months which are the interesting sectors to watch out for?
SaaS will be a favourite for the next 3-5 years. B2B commerce – both domestic and cross-border–is quite hot, and sectors like cross-border logistics and cross-border payments will pick up. Agri tech is going to be very interesting. Climate tech has also picked up and could be an interesting sector to watch out for in the next 12-18 months.
What are the main factors you look for before investing in a company?
We come at a very early stage when there are not enough data numbers to back or to tell the story. A lot of weightage is thus given to founders. Are they the right founders for this segment? Secondly, there should be a large market for a company to build a potentially $100-million revenue business. The third is to see if the product is 10X better than the next best alternative out there in the market. We support the company in the long run, say seven, eight years or ten years.
Have there been exits this year?
We have had two exits this year, and both in fintech. One was Ezetap, which was one of our earliest portfolio companies that got acquired by RazorPay for around $200 million, and Happay, an expense management start-up that was acquired by fintech unicorn Cred.
