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Pavestone Capital, a Hyderabad-based venture capital firm plans to invest in 12 start-ups through its target corpus of ₹700 crore, said managing partners of the firm.
The fund set up in July 2021 is a SEBI Regulated Alternative Investment Fund (AIF). It is predominantly a growth-stage fund that invests in Series A and Series B rounds.
Srikanth V J Tanikella, Managing Partner told businessline, “The fund’s investment is centered on investing in enterprise technology start-ups. that are building products or platforms to solve the problems of large enterprises.”
Additionally, Pavestone Capital also invests in frontier technology companies, such as space tech, 5G infrastructure, and sustainability, he added.
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The fund so far has reviewed nearly 350 start-ups in the last 18 months and made three investments cumulating to ₹80 crore, to date — two in Enterprise technology firms and one in a frontier technology firm. It has also given term sheets to two firms and is in talks with multiple start-ups.
Pavestone Capital considers start-ups that are already clocking around ₹6-10 crore in annual revenue. Tanikella said that the firm the first cheque given is in the range of ₹25-40 crore, and the fund takes a significant minority stake anywhere between 10-40 per cent depending on the valuation, market size, and other aspects.
“The firm also takes a board seat and actively engages with the founders and the teams to help the company grow. Along the process, we potentially even do a follow on investment of the same size. Pavestone holds all the investments for a period of five to six years, before taking an exit,” he added.
The fund although geography agnostic, prefers to invest in Indian start-ups. Laxmikanth V, Managing Partner said, “We prefer start-ups built in India as the cost of building and experimenting in the region is comparatively cost-effective.”
Addressing the changes bought about by the funding winter in the ecosystem, he said that the stress is mounting in the Series C, D, and above rounds, and while some investors are a lot more cautious.
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