Cornerstone Venture Partners (CSVP), an early-and-growth-stage venture capital firm set up by former Reliance executives Rajiv Vaishnav and Abhishek Prasad, invests in B2B tech startups, especially enterprise SaaS ventures. These ventures are adept at building vertical SaaS and marketplace solutions for local and global companies.
The firm is currently raising its Fund II of $200 million, focusing on SaaS and technology but also bullish on logistics and distribution. The VC expect to mark its first close of the fund in June this year and its final closure by March of 2025.
“There is a lot of headroom here to create efficiencies while organising a primarily unorganised sector,” said Prasad.
The firm is homegrown business-to-business (B2B) SaaS startup that has much more to offer to large enterprises, which is why it is doubling down on this segment with a larger quantum of investments, he noted.
To date, Cornerstone Venture Partners has invested in 21 SaaS startups from the first fund with an average investment value in each startup being in the range of $2-3 million.
On the performance of the first fund, Prasad said the portfolio of startups has witnessed a 4.5X in revenue growth. With the second fund, Cornerstone Ventures wants to aim to invest at the late-stage funding rounds.
“We will invest in the range of $5-7 million from the second fund largely at Series A and B stages of funding,” Prasad, Managing Partner, Cornerstone Ventures. In addition, Cornerstone Ventures hopes to seek investment opportunities at the late-stage funding rounds.
Prasad noted that the startup ecosytem saw a shift when B2B enterprise tech firms started garnering attention. “We saw the emergence of a new class of founders who were experienced professionals with strong domain expertise and then we decided that it was a good time to build a B2B fund in India,” says Prasad.
He believes that the scale of the SaaS startup ecosystem in India will only get bigger. A report by Bain & Co said it expects Indian SaaS companies to collectively reach $35 billion in ARR and capture 8% of the global SaaS market in the next five years.
He noted that generative AI (GenAI) is expected to create new business opportunities, and enterprises are keen to adopt the latest technologies.
“ We are seeing a transition from subscription-based models to value-sharing formats. Instead of the typical per-user, per-month payment model, enterprises today assess the value brought by a SaaS solution, say, a 3-10% revenue increase in a financial year. This new-age pricing strategy has unlocked substantial value for SaaS companies and counters commoditisation by aligning revenue with the value chain,” he said.
In terms of valuation, he said Indian SaaS is more cost-effective than its global counterparts, with valuations ranging from 5-7x recurring revenue, significantly lower than the multiple of 12-15x seen in the US. The firm focuses on vertical opportunities, that target/cater to large enterprises for sustained growth.
“Like Fund I, about 40% of our companies will receive follow-on investments. We aim to maintain a portfolio size of 15-20 companies, focussing on Series A and B deals and some provisions for late-stage investments,” he said.