Startups at the pre-seed and seed stages, particularly those in the business-to-business (B2B) sector, now have a fresh source of funding available. Garuda Ventures, an up-and-coming venture capital management firm, has successfully closed its inaugural fund, amassing $31 million in commitments to support B2B-focused software enterprises.
The two general partners of Garuda Ventures, Rishi Taparia and Arpan Punyani, bring valuable expertise in scaling companies from their previous roles. Taparia, an early employee at Poynt, a payments processing company acquired by GoDaddy in 2020, and Legion, a workforce management platform, also has experience as an investor at Matrix Partners, where he spearheaded the firm’s seed investment in Canva.
Punyani, on the other hand, spent over eight years at identity management company Okta, specializing in inorganic growth teams, with a focus on M&A and strategic partnerships. During his tenure, he contributed to growing the company from around 200 employees in 2013 to its successful IPO in 2017.
In 2018, Taparia secured $2.8 million for a “proof of concept” fund and invested in 32 companies. The duo officially founded Garuda Ventures in late 2021 and subsequently began discussions with investors to establish their debut fund, which they successfully completed three months ago.
Taparia shared, “Our primary approach to partnering with founders is that we’re building a firm ourselves, and we’re committed for the long haul because we’re building a franchise. Our aim is to become the go-to option on the shortlist for founders.”
Garuda Ventures’ investment strategy encompasses four key areas, as defined by Taparia and Punyani:
The New Perimeter: This includes cloud-native security and programmable infrastructure.
Climate 2.0: Involving the digitization of energy markets, grid management, and the transition to low-carbon solutions.
Intelligent Applications: Focusing on AI-enhanced applications and vertical SaaS (Software as a Service).
Commerce Infrastructure: This category encompasses technology that can enhance access and liquidity.
The firm intends to invest in 25 to 30 companies at the pre-seed and seed stages, with investment amounts ranging from $500,000 to $1 million. So far, Taparia and Punyani have already invested in 13 companies from their new fund.
Although companies in these early stages may not be primarily considering mergers and acquisitions (M&A), Punyani anticipates a resurgence in M&A activity, partly inspired by recent deals like Atlassian/Loom and Databricks/Arcion. Garuda Ventures believes it offers a unique value proposition to founders based on Punyani’s M&A background.
Punyani noted, “After developing expertise in the partnership and M&A aspects at Okta, we are in a position to provide advice to portfolio companies when they receive inbound M&A interest, drawing from our experience on the other side of the table as buyers.”
Garuda Ventures’ portfolio currently includes companies such as Dashworks, which provides an internal knowledge search engine; Stax, a company facilitating fund transfers in Africa via automated USSD codes; and Evergrow, a climate project financing company.
