Evolution of Athera: How this Bengaluru-based VC fund is shaping the future with a tech-driven vision

In the large, austere conference room, which just has some wood panelling, the firm’s four General Partners gather for a freewheeling chat. Soft-spoken Samir Kumar, 62, his tone firm, speaks of how he and his colleagues—General Partners Parag Dhol (56), Rutvik Doshi (48), and Rajiv Mehta (46)—look at a business plan. “Of course, over time, that process has been fine-tuned, but at the core, we look at a 10x return.” That is ambitious on any given day, but it’s something that Athera, which translates to journey in Sanskrit, has gotten better at.

Athera, originally known as Inventus India, was launched in 2008 and has so far invested in over 40 companies, deploying about Rs 1,200 crore across its four funds, and has an active portfolio of 19 companies. Till its third fund in 2018, investments were made from a global pool. It participates largely in Series A and opportunistically in seed funding, with cheques in the Rs 5–35 crore range.

Some of its bets have netted it stellar returns upon exit, done through a combination of IPOs, M&As, and cash. There’s ticket booking platform redBus, which delivered multibagger returns after it was acquired by Ibibo Group, before MakeMyTrip picked it up in 2013. PB Fintech, parent of insurance platform Policybazaar, yielded a stellar return when it went public. Other exits include Instahealth after selling it to Practo, while FundsIndia was acquired by Westbridge.

Buoyed by these successes and learning from some failures, Athera is cruising ahead with its single-minded focus on finding sustainable technological solutions to address some pressing challenges confronting society.

Going About it Quietly

The list of companies Athera has invested in is diverse; it has embraced a host of sectors—from consumer internet and enterprise/SaaS (software-as-a-service) to deep/emerging tech. “We are sector-agnostic, but there is method to the madness. There are clear boundaries, and we will invest only in businesses that we understand,” says Rutvik Doshi, who cut his teeth in software before joining Athera in 2012. If you pare it down, the strategy is simple: the investee company must be tech-first or one that uses technology innovatively to create a differentiating proposition.

That has informed the investments made in each of its four funds, beginning with the first one in 2008 that had a size of Rs 146 crore. The second one, closed in 2013, had dry powder of Rs 325 crore. The third fund was bigger at about Rs 361 crore, and its fourth, and biggest yet at Rs 900 crore, had its first closing on September 30, 2023, and is scheduled to have its final close on March 31, 2025.

There is a heavy emphasis on tech, Doshi says, because businesses can scale in a non-linear fashion, and there is a certain magic that is hard to replicate, which provides a competitive advantage. Take SaaS, for instance, where Athera waded in before it became a buzzword. “India is at an important [stage] on the SaaS story, and our companies account for less than 2% of the global market. But we have a large talent pool, and the potential is too large to miss [out on].”

That’s why it became the lead investor of a company like MoveInSync, which operates in employee transport management solutions, as far back as 2014—it has invested Rs 15.9 crore. It is a demonstration of the “non-linear” ability that appeals to Athera. MoveInSync Founder Deepesh Agarwal says the company was initially just into the software business before it moved into fleet management. “Employee transportation was not a very big business, and we started off with Google as our first client before adding Microsoft and HSBC,” he says. Athera’s Kumar says the comfort factor came from marquee clients. “We always back the jockey,” he chips in.

It was by no means a glamorous business, but MoveInSync’s revenue has taken off from Rs 4 crore in 2014 to Rs 500 crore now. Agarwal recalls Kumar’s counsel at one meeting. “He said Athera invests in, say, 10 companies, and some may fail. But you have just one company.” The lesson was clear: adherence to financial diligence at every stage was critical.

One of Athera’s most visible successes is redBus, in which it invested Rs 10.4 crore in mid-2009. The shadow of the global financial crisis was still lurking in the background, but a decision to back the promoters—Phanindra Sama, Charan Padmaraju, and Sudhakar Pasupunuri—turned out to be a smart one. “When we put in our money, what stood out was a clear value proposition: convenience and price. Our strong belief was that the bus is the cheapest mode of transport,” points out Athera’s Dhol. In the case of PB Fintech, in which Athera invested Rs 28 crore, it was in a heavily regulated industry, but “again [we] backed the promoters and it paid off”.

All these bets are premised on one factor: technology. Rajiv Mehta, who joined Athera after over two decades in consumer and retail with Puma, Arvind Brands, and Stovekraft, puts it thus: A sound understanding of technology and high-quality execution results in higher gross margins. “It is definitely our strength, and we must play to it,” he says.

But in the VC space, sometimes there really is no success like failure. Plans do go awry once in a while, and Athera is no exception. Mehta reflects on their experience with Little Black Book (LBB), which worked on local business discoverability. It scaled up and got traction, till the pandemic hit. “With businesses remaining shut, revenues nosedived and survival became most important,” he says. There was a large and loyal customer base, and Athera decided to “conserve capital” and sold the business to Nykaa, ensuring investors did not lose their entire capital.

The other one that stands out is Power2SME, a B2B digital platform that helps SMEs access financial products and raw materials at a competitive price. Dhol says its two founders had great vision. The problem was that the business had low margins and long working capital cycles. “In such businesses, execution becomes key, and if one cannot capture market share quickly, competition can easily take charge. Pressure on profitability and the inability to scale up fast enough led to the investment being written off.”

Big Opportunity

How does Athera pick from the plethora of companies available? That is where a small team comes in handy. There is no luxury of a junior team, and Doshi emphasises Athera’s belief in the early-stage ecosystem. “If we are not interacting with the entrepreneurs there, how do we pick out the clues?” he asks.

An interesting demonstration of this approach is its investment in Pixxel, which operates and designs low-earth imagery satellites. In 2019, Dhol was asked to meet with two young entrepreneurs, who came with the reputation of being “bright guys”. Spacetech was a new area, and the business had to be understood. “They had nothing to show but a plan, and there was little money available. It was a case of a company where we had no expertise and we spoke to at least five people to understand it,” recalls Dhol. Within a month, a small monetary commitment was made. “We had never done space before, but we are not bound by a thesis. We finally went for it.”

If one has a feel for technology, it’s easy to spot an innovation early. Converting that to a robust business proposition is a big deal for the folks at Athera. Kumar points out that Athera went for both fintech and SaaS when there was no such term in the lexicon. The decision to invest in smart helmets and accessories maker BluArmor was taken right after the pitch was made. “We liked the entrepreneur (Sundararajan Krishnan) and the words he used (‘I want to provide the highest cooling per watt of power that I consume’),” says Kumar.

Returns of 10x are perhaps far easier in the SaaS space, but BluArmor was a very different proposition. Athera had to first study the two-wheeler market, which threw up the number of helmets sold each month. They then looked at safety and innovation. “Music could be shared between the rider and pillion [rider]. They pivoted away from cooling but had the pulse of the consumer,” adds Kumar.

Getting Better

Athera’s canvas is large because it takes a broad view. Dhol of Athera says we live in “a very specialised world, and multi-disciplinary problems need to be solved”. One manifestation of that view is the investment in Euler Motors, an electric vehicles (EV) manufacturer. What swung the deal was the insight from the Founder, Saurav Kumar. A traditional car company optimises its production line with one thing in mind—that 80% of it is made of steel. EV is a different proposition, though. “When he said 20% was steel and 80% everything else, it seemed very simple but was in fact a huge insight,” says Doshi.

That goes to the heart of the Athera approach: find a complex problem, simplify it, and then figure out a way to crack it. “When you look at Pixxel or BluArmor, its founders are really first-principle thinkers and possess high levels of confidence in their ability to get it right or just put in all the effort needed. They are even-tempered individuals, and that is a trait we like,” explains Mehta.

The strong emphasis on technology, too, has many parts to it. “Since it cannot be replicated easily, that lays the base for differentiation. It is the moat around which businesses get scaled and also leads to high entry barriers,” feels Naman Vijay, Co-founder and CEO of ClickPost, an end-to-end logistics company. Athera invested Rs 19.7 crore in it this April.

Vijay says vertical software, or software designed for a specific industry or market, “is a nice space” to be in. The evolution from being a developer to solving a business use case has helped. “We are highly focussed on serving Indian D2C brands and retailers.” He adds that getting it right in this space leads to very high levels of stickiness from customers.

The team at Athera will be hoping that Vijay continues to get it right as they ambitiously chart out their next high-return exit. Their simple, logical investment approach is clearly proving to be the magic formula for success.

@krishnagopalan