Prudent Investment Managers Planning to Establish a Fund of INR 500 Cr for Early-Stage Startups
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Prashasta Seth, the former CEO of IIFL Asset Management, formed Prudent Investment Managers, which has launched a fund of INR 500 Cr, or around $57.8 million, to invest in early-stage companies. Seth told a media outlet that the fund, which will be a Category II Alternative Investment Fund (AIF), has already obtained INR 250 Cr in pledges from several family offices and will close sometime in June of this year.
Prudent is currently submitting a CAT II licence application to SEBI. PE funds, real estate funds, and funds for distressed assets are all included in Category II AIF. According to Seth, despite not having a formal fund structure, Prudent has invested over INR 160 Cr in unlisted companies since its founding. Among its most recent startup investments are Snapmint and The Money Club. The business intends to strengthen its strategy of combining the investment philosophies of venture capital and private equity with the new fund.
According to Seth, pre-Series A and Series A firms with viable business plans and solid unit economics will be the main targets of funding. By assisting founders that value long-term viability over quick, unsustainable growth, the fund seeks to close the gap in early-stage investing.
A Methodical Investment Strategy
Prudent intends to use a focused investment strategy, providing early checks of INR 30 Cr to INR 50 Cr each to support 10 to 15 businesses. According to Seth, Prudent's strategy places a strong emphasis on large bets and steady follow-on funding over several rounds, in contrast to standard VC companies that distribute investments across a wide portfolio.
The fund will concentrate on businesses with "sound unit economics" and will not be sector-specific. At the concept stage, we don't compete. Rather, we concentrate on businesses that have solid unit economics, real revenue, and tested business concepts. "We want to minimise losses and provide consistent returns of 5X to 20X," Seth continued.
Investors’ Profile
Speaking of investors, Seth stated that Prudent counts roughly 25 family offices as clients and has over INR 750 Cr in assets under management (AUM). This corresponds to an average cheque size of INR 20 Cr to INR 30 Cr, he stated. On the unlisted side, a large number of these clients have also invested in the business throughout all of the transactions the firm has completed.
Small family offices with portfolios ranging from INR 50 Cr to INR 200 Cr make up the majority of these, not the well-known ones. They will act as the brand's anchor investors. After leaving IIFL Asset Management in 2020, Seth founded Prudent. It offers advising and portfolio management services. Seth says that during his time at IIFL Asset Management, the company's AUM increased from INR 500 Cr to INR 25,000 Cr.
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