Inventus Capital launches Rs 900 crore fourth fund; rebrands as Athera Venture Partners

Bengaluru: Inventus Capital, which has backed companies like RedBus and PolicyBazaar, has launched its fourth fund (Fund IV) with a target corpus of Rs 900 crore (roughly $116 million), as it looks to continue investing in early-stage consumer internet and Software-as-a-Service (SaaS) startups.

Fund IV is awaiting approval from the Securities and Exchange Board of India (Sebi), with a final close still six months away.

Inventus has also rebranded itself as Athera Venture Partners.

The launch of the fund comes at a time when dealmaking has slowed down with macro headwinds hurting investments and valuations of technology companies.

Athera’s latest corpus is
more than double its last fund worth Rs 369 crore, the final close of which was announced in October 2019. Through its third fund, Athera invested across 13 new startups including space-tech firm Pixxel; interactive toys company Playshifu and automotive company Euler Motors.

This will be Athera’s second exclusive India-focused fund.The firm has been investing in Indian startups since 2006. Athera’s first two funds were focused on investment opportunities across India and the United States.

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The fourth fund is expected to have an equal mix of domestic and international limited partners (LPs), with prominent founders of its portfolio companies, including Redbus’ Phanindra Sama and PolicyBazaar’s Yashish Dahiya and Alok Bansal also investing as part of the fundraise.

“Over the last few weeks, we have met some of our existing LPs and all of them have said that they will come back with larger cheque sizes to the fund. This has bolstered our confidence despite the environment,” Samir Kumar, managing director and general partner at Athera Venture Partners, told ET. “We have had several companies that have given good exits and people have committed to looking at the DPI (distribution to paid-in) figures that we have. We will remain focused with our heads down despite the noise.”

Apart from backing consumer internet and software startups, Athera will also look to invest in upcoming sectors including blockchain and Web3, as well as catch opportunities in the deep-tech, electric vehicles and space-tech sectors.

Corrections on horizon

There has been a slowdown in investment activity in the first half of this year compared to the frenetic dealmaking pace in 2021.

Global funds including
Y Combinator,
Sequoia Capital and Lightspeed Venture Partners have already issued advisories to their portfolio companies on the downturn.

“It takes almost 7-9 years for a startup to scale and eventually deliver results. So, it is a very long journey, and you are bound to see multiple economic cycles in that journey, and it eventually smoothens out if you’re coming in early,” said Rutvik Doshi, general partner, Athera Venture Partners, on raising its fourth fund amid a market slowdown.

Athera’s total fund close can go up to Rs 1,300 crore, Doshi added. “The good thing about investment is that there is self-correction. This particular downturn will self-correct. So, discipline is essential, and this is a 10-year game, where you cannot look at markups every three months,” said Parag Dhol, general partner, Athera Venture Partners.

Dhol said their advice to entrepreneurs is to balance growth with new initiatives, while showing growth and profitability in their core businesses.

Athera is looking to write cheques of Rs 5 crore to Rs 10 crore for startups at the seed stage and expects to go up to Rs 30 crore for early-stage bets. With the new corpus, it will looks to keep 10-15% of the fund corpus to back some of the high growth startups in its portfolio.

“Pricing (of deals) is definitely correcting now. Some of the early-stage deals where the median had gone up will correct by 20%-30% … The ‘outliers of excess’ where there are repeat founders (starting up) or well-known people in the ecosystem raising funds at high valuations with no product or substance, those kinds of deals will slow down,” Doshi added.

Top-tier VCs including
Accel and
Elevation Capital have all closed their latest funds and increased their corpus size on the back of a record-breaking year for funding for Indian startups.

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