Promaft Partners launches Rs 1,000 Cr VC fund

Promaft Partners, a new venture capital firm has announced the launch of a Rs 1,000 crore fund, backed by Indian family offices as well as startup founders.

Founded by former head of Investments at Alibaba Group India Raghav Bahl and 9Unicorns ex-partner Soham Avlani, Promaft Partners will be a sector-agnostic fund with plans to make 10-12 investments.

According to a statement, the founding general partners have been involved in investing and managing portfolios, which included brands such as Swiggy, Paytm, BigBasket, XpressBees, TaxiForSure VideoVerse, and PharmEasy. Their portfolio has returned over $1 billion in profitable cash exits from India, the statement claimed.

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The name Promaft stands for product market fit and the partners plan to leverage their global investing experience across China, SEA and Europe to help startups in developing go-to-market and business strategy, hiring and financing.

"Growing without a product-market fit is like driving fast in the wrong direction. And product-market fit without sustainable competitive advantage doesn’t create shareholder value. We encourage our entrepreneurs to grow slowly while investing in the core fundamentals of the business,” said Raghav Bahl.

The founders of companies such as Paytm, Zomato, Browserstack, Livspace, Pharmeasy and VideoVerse are backing the fund and will also double up as mentors for the fund’s portfolio companies, the company's statement added.

The VC firm highlighted the present situation as a ‘double trophy’ investment vintage. In 2020-21, valuations were high, and growth at any cost was the norm. Entrepreneurs had to frequently raise more money, driven by investors’ high valuation demands for rapid growth.

This growth was often achieved through heavy discounts, fueling further capital needs. Even sensible entrepreneurs were forced to raise more funds to compete with well-capitalised competitors. This cycle ended abruptly with rising interest rates.

“We believe that this vintage encourages entrepreneurs to develop capital-efficient businesses while the absence of large funds has resulted in valuations to sober down. We remain excited about this environment as it provides for a highly attractive ‘risk-return profile’ for both investors and entrepreneurs.” said Soham Avlani.