Pentathlon Ventures, an early-stage venture capital firm with a focus on B2B Software-as-a-Service (SaaS) startups, has unveiled its second fund, Fund II, with a target corpus of INR 450 crore. The fund aims to invest in 25 B2B SaaS startups spanning various sectors, including enterprise digital transformation, fintech, ecommerce enablement, vertical SaaS, applied artificial intelligence (AI), sustainable technology, and healthtech.
Prior Success with Fund I
Established in 2020, Pentathlon Ventures has already demonstrated its commitment to nurturing startups. Through its first fund, launched in 2021 with a corpus of INR 76 crore, the firm supported 23 startups, including notable names like Deeptek, Rezolve, Spyne, Dista, TurboHire, and ShopSe.
Investment Thesis and Market Outlook
Pentathlon Ventures’ investment thesis for Fund II centers on the robust growth potential of India-based B2B startups. The firm anticipates that revenues from these startups will witness a remarkable 25-fold increase in the next eight years. These startups boast a 50% faster time-to-revenue, enhanced revenue predictability, and robust gross margins ranging from 70% to 80%. Such promising attributes offer substantial opportunities for building sustainable businesses.
Commenting on the investment thesis, Sandeep Chawda, Managing Partner at Pentathlon Ventures, stated, “Early-stage B2B SaaS companies built in India continue to be our primary investment thesis.”
Capital Sources and Global Focus
For Fund II, Pentathlon Ventures is sourcing capital from a blend of domestic and global limited partners. The firm recognizes that Indian B2B startups are poised to achieve global leadership status in the coming decade, with favorable tailwinds stemming from increased global attention on India’s burgeoning tech ecosystem.
Gireendra Kasmalkar, Managing Partner at Pentathlon Ventures, noted, “We are truly on the cusp of a huge virtuous cycle.”
Investment Landscape in India
Pentathlon Ventures’ fund launch occurs in the context of Indian startups facing challenges in securing funding over the past 18 months. Surprisingly, this funding shortfall has occurred despite ample funds being available to investors. According to an Inc42 survey of over 70 active VC firms in India, Indian VCs have only deployed 26% of the capital allocated for FY24, retaining the majority.
Despite this, investors in India have been actively launching or announcing new funds since the beginning of 2023. These include MIXI’s $50 million CVC fund, CapFort Ventures’ INR 400 crore fund, and Good Capital’s $50 million fund, among others.
