Introduction

High-Stakes is a unique series that focuses on dissecting the investments of venture capital and private equity firms to gain insights about the portfolio of companies they’ve invested in, exit strategies, industries they focus on, qualities they look for in a founder and their investment process. In this edition of High-stakes, we’ll be focusing on Prime Venture Partners

Source: Funding data (as on 24th Dec, 2020), Crunchbase
*Startups considered for this analysis are those that are currently operative and for which adequate information exists

Prime is an early-stage venture capital fund led by Sanjay Swamy, Shripati Acharya and Amit Somani. Founded in 2012, the firm was initially known as AngelPrime, and their initial aim was to focus on infusing Silicon Valley-type professionalism with venture investing and nurture exceptional companies out of India. They renamed themselves as Prime Venture Partners in 2015. 

With a firm belief that the success of a venture hinges on making the right choices in the first 12-18 months of the company, Prime works closely with the entrepreneurs across various verticals such as business strategy, marketing, fundraising and hiring. 

Ideal Investment

“Diversification is a protection against ignorance”

– Warren Buffet

Prime is a low volume and high support investor, with all the partners working closely with the entrepreneurs for the first 12-18 months of the journey. They typically invest in 4-5 companies a year and have invested in more than 25 startups to date. 

Team: They look for people who are passionate about solving the problems they set out to solve and have expertise in the domain they operate in. Prime realizes that entrepreneurship can be difficult and challenging; therefore they stress  the importance of founders who are mission-driven. Additional characteristics they look for in a founding team (as mentioned on their website):

  • Deep 10X insight on customer problem, technology insight or a differentiated business model
  • Strong understanding of the market
  • Complementary and a collaborative team
  • Strong learning quotient, a bias for action and big vision

Market: They prefer bottom-up sizing instead of top-down market sizing. This suits its approach of being the first institutional investor in category-creating tech startups, as in such cases there may not be a directly quantifiable market size so a bottom-up approach can be used as a proxy to represent the market and they claim to be comfortable in taking market risks and usually avoid taking business model risk.

Thousand per cent: The firm looks for solutions to real-world problems that are ten times better than those currently available as it is these differentiators that offer strong moats and defensibility in the future. The 10X differentiator could be in any form, from product and business model to go-to-market strategy or a unique industry insight and is opposed to copy-cats and incremental solutions.

1-10-25 Approach: As an investor, Prime aims to understand the startup’s business model and its addressable revenue opportunity. The approach refers to how long and how much invested capital will be needed for the company to reach revenues of $1 million (USD), $10 million (USD) and $25 million (USD). The journey to reach $1 million (USD) provides an insight on the operating plan for the next 12-18 months while $25 million (USD) helps assess the size of the addressable market. 

Approaching Prime Ventures

Its preferred way of being approached is through a mutual connection such as founders of their portfolio companies, other angels or founders they know, while the least effective way of approaching them is through a cold, cookie-cutter email. They also seek founders through outbound efforts and encourage founders to talk about the problems they are solving, why they’re solving them and their end goal.

Ideally, they invest in startups with an initial product-market fit, preferably an initial business model, but they’ve invested in startups with zero revenue. People at Prime meet entrepreneurs from all stages – ideation to mature startups. Prime Ventures is sector agnostic and does not invest in particular areas or industries, but their investments have clustered around Fintech, Enterprise, SaaS and Consumer Internet. They’ve also invested in sectors such as EdTech, Healthcare, Logistics and IoT. 

Team and Decision Making Process

The investment team consists of five people- three full-time partners and Partner Emeritus-Raj Mashruwala and Gaurav Ranjan, who is also on the investment team. 

Full-time partners

Sanjay Swamy:  Having been in founding roles in companies like ZipDial (acquired by Twitter) and Ezetap (co-founded in 2010), Sanjay is no stranger to the startup space. He has worked alongside Mr Nandan Nilekani (Co-founder of the Indian multinational IT services giant-Infosys) on the UIDAI project (Unique Identification Authority of India, the statutory body that headed the creation of the world’s largest biometric ID system-Aadhar). He is also a frequent speaker in the entrepreneurship and payments circuits in the country. 

Shripati Acharya: Shripati has had an illustrious career having co-founded Snapfish, the world’s largest photo site which was acquired by HP, served as a business lead at Cisco and has also worked alongside Mr Nandan Nilekani. 

Amit Somani: He has more than two decades of experience in technology and internet industries having held various roles in companies like MakeMyTrip as Chief Products Officer and was a part of the leadership team that took the company public on NASDAQ and has also held a position as the Director of the Enterprise Search and Discovery business at IBM San Jose, California.  

Typically, the entrepreneurs meet with each partner on a one-on-one basis, with the lead partner spending more time, followed by a 4-person Investment Committee (IC) as appropriate. It usually takes around 3-6 weeks to make a decision after a thorough discussion with the entrepreneurs, customers, people in the industry and analyzing the product while respecting the entrepreneur’s time. 

Investment

Source: Funding data (as on 24th Dec, 2020), Crunchbase
*Startups considered for this analysis are those that are currently operative and for which adequate information exists

Usually, around $4 million (USD) is allocated per company in the life of the fund with the initial investment being $1 million (USD) to $1.5 million (USD), remaining amount serves as a reserve capital for future rounds of financing. It is important to note that the entry ticket size varies based on the nature of the business and its capital requirements.

Post-Investment Assistance

 Assistance is in the area of business (Product, Go-to-market and sales strategy and execution), team building, partnerships, subsequent fundraising, evangelism, operating help in finance, legal, public relations & community and anything else that the founders need help with.

Exit Strategy

Prime is a long term investor that believes that the entrepreneurs will build a large independent company and Prime would ideally hold on till an IPO or a sizable M&A event. Considering the limited partners and the fund boundaries, the typical holding time will be between 7 to 10 years. They’ve rarely made a secondary sale in any of their investments till date. 

Analysis

The analysis is based on the data from Crunchbase, and the startups included are those that are currently operative and for which adequate information exists. The figures for total money raised represent the total amount of funding raised by the startups from Prime and various other investors across the different rounds that Prime has participated in. Startups in Prime Venture Partners’ portfolio have cumulatively raised close to $236 million (USD) till date and belong to various industries across the spectrum ranging from Business/Productivity Software and Consumer Finance to Food Products and Human Capital Services. 

Source: Funding data (as on 24th Dec, 2020), Crunchbase
*Startups considered for this analysis are those that are currently operative and for which adequate information exists **Primary industry classification is based on Pitchbook’s classification of the startups

Among the portfolio of startups, the ones in the Business/Productivity software industry have raised a staggering $81.1 million (USD) (34.3% of the total money raised) which was pumped into startups like MyGate, Perpule, Happay, SurveySparrow and WheelsEye. In this industry, MyGate is the largest recipient having raised $64.8 million (USD) followed by Happay with $8.2 million (USD). MyGate is an app which simplifies the check-in process at gated communities and offers services like security management and community management. Happay offers automated enterprise expense management for companies to easily track, approve and process employee expenses and expense reports. 

The Financial Software industry is ranked second in terms of the money raised, attracting 27.7% of the funds. This industry boasts of startups like KredX, NiYO Solutions, Affordplan and Recko. KredX is a B2B invoice discounting platform which counts Sequoia Capital India and Tiger Global Management as its investors, apart from Prime. It has attracted the highest amount of funds (USD 33 million) among other startups in this industry. Based in Bangalore, India – NiYO Solutions is a fintech company backed by famed investors like Tencent holdings and Social Capital. 

MoneyTap is a unique startup which offers an app-based personal line of credit to make credit accessible to millions of Indians, classified under the Consumer Finance industry; it has raised $40.3 million (USD) from Prime and other investors who’ve participated in its funding rounds. Prime has participated in the seed funding round of another startup in this industry- OTO Capital, which is into automobile financing.

mFine, an AI-powered healthcare platform that connects an individual to top-notch doctors online is the only startup in the Other Healthcare Technology Systems industry. It has raised $21.4 million (USD) in two rounds- Series A and Series B from Prime and other notable investors like Stellaris Venture Partners and SBI Investment. 

Startups classified under Media and Information Services (B2B) include Synup and Vidgyor. Synup has raised the highest amount of funding among these startups- $6.5 million (USD) across two rounds, a Seed round in 2014 and a Series A round in 2017. Vidgyor is an online video advertising platform based in Bangalore, India, which raised $500K (USD) in a Seed round in 2015 from Prime and TLabs. 

Source: Funding data (as on 24th Dec, 2020), Crunchbase
*Startups considered for this analysis are those that are currently operative and for which adequate information exists
**Primary industry classification is based on Pitchbook’s classification of the startups

Being the latest investment of Prime (Investment announcement date – Oct 7th, 2020) as of the date of writing this article, Winuall which specializes in the fields of e-Learning, online quizzes and tests for competitive exams, has raised $2 million (USD) from Prime, BEENEXT and Ramakant Sharma. 

Overall, Prime has made approximately 41 investments between 2012 and 2020, with 2018 and 2019 being their most active years with nine investments each. Most of their investments are in the Seed and Series A round with 15 and 13 investments respectively.

Conclusion

Prime Ventures Partners are highly experienced long-term investors who believe and actively support entrepreneurs throughout their journey. They look for entrepreneurs who are mission-driven and are passionate about the problems they are solving. They are sector agnostic and invest in category-creating startups that offer significant moats and defensibility in the future. 

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