These veteran stunts say that funding startups for the winter will separate the men from the boys

Investing in startups may not be for the faint-hearted during a funding slowdown, but seasoned investors like Athera Venture Partners see it differently.

The venture capital firm, formerly known as Inventus India, has been in the field since 2008 and invests in early stage startups. She says some of her best investments were during the so-called tough periods.

Technology-focused Athera as a cross-border venture capital firm between the US and India has begun charting an independent path with the launch of its third fund in 2018 that focused solely on Indian start-ups. Now, it has announced the launch of its fourth fund with a target size of Rs 900 crore, and has also renamed the project.

Athera – that invested in PoliticsAnd the red busAnd the pixelAnd the Play Shifuand 31 others so far — yielding returns of more than 20 percent.

in conversation with your storyAnd the Parag DolAnd the Rotvik DoshiAnd the Sameer KumarGeneral Partners at the venture capital firm said founders and investors should not be distracted from all the negative talk, and instead focus on their work.

Edited excerpts from the interview:

Your story (YS): How does Athera Venture Partners see the current environment?

Parag Doll (PD): The ecosystem was excited until last December but now the mood has changed. It is in the nature of financial markets that as moods fluctuate, the pendulum also moves. Our view is that only men who maintain a balance in both the good and the bad times will do well. Our best investments were in 2009 and 2013 when the overall situation was not encouraging.

This is a 10-year business where things will move up and down, but we will continue to focus on making investments in sustainable companies. I think those two or two years in between doesn’t make a difference in the business. They are just noise.

YS: What advice would you give to the founders of your portfolio companies?

PD: there These are some of the discussions taking place with our portfolio companies as they consider their next fundraising process. If the focus is on sustainability and the company is moving in that direction, I still think there is enough money available to support it.

However, there may be instances of devaluation. Second, the case of companies that do not have a secular growth path and will have to be supported by existing investors. The hardest question is about companies that are in decline.

If this continues for some time, there will be quite a few difficult conversations that are inevitable. In our portfolio, the situation doesn’t look scary.

YS: Will there be some disconnect between startups now?

PD: It’s like men They will separate from the boys. There is not necessarily a constructive path in the destructive nature of capital. Ineffective companies should go down and let’s live with this reality.

The founders will also learn to live with that. The thing that gives me hope is looking at how entrepreneurs responded in the early days of the COVID-19 pandemic.

The speed with which they made decisions, they did not act like an ostrich burying its head in the sand in the hope that everything would explode.

YS: How do you see big VCs getting into early stage investing?

PD: We expect to make four to six investments per year, and there are enough quality entrepreneurs in terms of deal flow. When you have a $1 billion or $500 million fund, where one spends $2-3 million on each startup, then you end up with several companies where one might not even remember all the names. This is not sustainable and is a dangerous place with a low probability.

We tell our companies that we strongly believe in focus, an important component of success as people know what their field of expertise is. We are the owners of the value.

YS: What is the strategic goal behind the rebranding?

Rotvik Doshi (RD): We made our first investment in 2008 and we are now investing from our third fund. With Fund IV, we are increasing our commitment to India.

This means two things. One where the volume of the box will be three times larger than the previous one. Secondly, with the change of brand and name centered around India, it indicates that we are totally loyal to the country.

YS: What will be Athera’s relationship with Inventus Capital US?

Sameer Kumar (SK): When we were restructuring in 2018, there were many moving parts that we felt shouldn’t be disturbed. Our third fund was fully raised by India Partners, and now we have a clear rebranding, reinforcing the central identity of India.

We continue to maintain links with Inventus US due to the prior portfolio of investments from Funds 1 and 2. They will be jointly managed until exit.

Research and development: As a cross-border fund, there was an existing identity with the Entrepreneurs and Limited Partners (LP) ecosystem. Now four years later with our third fund, it was important to point out that India is India-centric with a much deeper focus and removing any confusion from the legacy of the past.

YS: What are the investment focus areas for Fund 4?

Research and development: Athera was a non-sector fund focused on technology and its core DNA would not change. Box 1 and 2 were mostly B2C, B2B SaaS. In Box 3, the focus was the same, but we started taking early bets in emerging technology areas like spacetech startup Pixxel, Koinearth and EVs in 2019.

Our portfolio is third in both B2C and B2B SaaS and Emerging Technologies. It will be the same in the future in the fourth box and there will be areas in emerging technologies that we have not heard about at the moment.

In Fund 4, we plan to invest in about 18 startups for a much higher amount.

YS: Who are the LPs in the fourth box?

Research and development: When we started box 3 the local LPs were new. For Fund IV, we have concessional commitments from existing LP partners who will come back and support us. It would be a good mix of local wealthy people, family offices and foreign investors.

Our portfolio company founders such as Yashish Dahiya of Policybazaar, Phanindra Sama of redBus, Pavan Sondur, Prashanth Kumar of Unbxd and Ramesh Emani of Insta have made commitments. We expect the split between local and foreign liquidity providers to be 50:50 and expect the first close of this fund in the next three to six months.

YS: How have previous Athera funds performed?

Research and development: Investing in redBus was a notable exit for us around 2013-2014, and it reinforced the belief that companies in India could succeed. We generated nearly 20 times a return on our initial investment.

From Funds 1 and 2, we returned significantly more capital with profitable exits from quite a few startups. We have provided an internal rate of return (IRR), which is over 20-25 percent. Box 3’s early days are still early days, but there are emerging winners like PlayShifu and Pixxel.

We see no reason why the third fund could not outperform. For example, when we see the third year mark of companies under Fund 3’s portfolio that have expanded to the $100 million valuation mark, it is significantly higher than that of Fund 2.

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