Prudent Investment Managers, founded in 2021, identified a gap in startup funding and adopted a private equity-like approach to early-stage investments. “Typically, early-stage investors focus primarily on the idea and the founding team, assuming financials will fall into place over time. However, we emphasise unit economics, business sustainability, and ensure promoters secure timely funding to avert any financial constraints that could force a shutdown,” says Prashasta Seth, CEO, Prudent Investment Managers. The fund house’s portfolio includes Flipspaces, Snapmint, HROne, and The Money Club .
Edited excerpts.
What is your investment thesis?
Our investments always have a strong tech angle; we don’t want to invest in companies that are mere replicas of existing businesses. While we are largely sector-agnostic, we focus on opportunities where we see strong potential, backed by a capable team and a sustainable business model.
We invest across various stages, from early-stage startups to pre-IPO and listed companies. Currently, we manage a ₹750-crore portfolio management service (PMS) focused on the listed market. This quarter, we plan to launch a category II as well as category III alternative investment fund (AIF). On the unlisted side, our investments span different stages, albeit in a relatively unstructured manner, through a group of investors using power of attorney (POA) structures.
We currently don’t have a fund structure and we invest as a pool of investors in individual opportunities. We have invested about ₹150 crore across five opportunities in the last couple of years.
At what stage do you typically invest in a startup?
We usually invest at the pre-Series A or Series A stage, focusing on companies that have demonstrated a viable business model. While they may still be loss-making at the time of investment, we ensure there’s a clear path to profitability. We assess key financial metrics such as unit economics, customer acquisition cost (CAC), lifetime value (LTV) to CAC ratio, gross margins, and EBITDA projections.
Our sweet spot is companies with a valuation of ₹100-200 crore, where we typically acquire a 10-20 per cent stake.
What is your average cheque size? Do you prefer taking a board seat?
We invest ₹15-20 crore and prefer to lead the funding round. We also take a board seat. Our goal is to collaborate with startups and support them through the next two to three funding rounds.
What is your risk appetite like?
We take a long-term investing approach, typically with a five– to seven- year horizon. Our risk appetite is high — we prefer to be invested in 10–12 companies at a time. However, we do not follow a “pray-and-spray” model.
We back a company with full conviction, and we participate in multiple funding rounds for our portfolio companies.
How many investments have you planned for this year?
We recently closed an investment. We plan 3-4 investments this year.
