In the past three years what we have come to realise is that AI is set to bring in sweeping changes across industries, and naturally, the horizon for SaaS and software investors has also widened. Stellaris Venture Partners, known for its SaaS bets, including Whatfix (which is IPO bound), Revenuehero, GTM Buddy, and Slintel believes that with the AI boom, SaaS is being put through the churner as well.

Perhaps as a result of this churn, Stellaris is shifting its investment focus from horizontal to vertical SaaS and also keeping an eye on AI-powered productisation of the services economy. And finally, there’s consumer-focussed AI applications, which have gained more prominence in the fund’s thesis since the end of 2024, particularly for fintech, edtech, and healthcare.

In November 2024, Stellaris closed its third fund at $300 Mn (about INR 2,534 Cr) from which it plans to back 25-30 startups over the next three years with a ticket size maximum of $10 Mn. A major part of the corpus is for new deals, while there will be a few follow-on rounds.

Speaking to Inc42 for our Moneyball series, Alok Goyal, partner at Stellaris, said he believes that AI has upended the notion of sector agnostic funds as well. Stellaris continues to remain sector agnostic, but AI is a persistent and strong theme in the deal flow and for nearly half of its existing portfolio. In many cases, not using AI can be an existential crisis.

The challenge for Stellaris and plenty of other funds is to stay steadfast to the thesis even as AI disrupts the world of SaaS and sweeps up consumer software along the way. “We don’t want to build a fund where 70% is Fintech or 80% is SaaS. And there is a reason,” Goyal claimed.

Edited excerpts from the conversation

Inc42: Stellaris VP has been around for the last eight years and now you have launched your third fund. Give us an idea of how the investment thesis has evolved in the firm.

Alok Goyal: Our core thesis, call it boring, hasn’t changed much from the time we started. Our first fund was a $90 Mn fund, the second was a $225 Mn fund in 2021, and all across, our strategy has been consistent – our entry is always in the early stage, from seed and Series A. But we follow on in future rounds in these companies.

Besides, there are a few other aspects that have remained constant for Stellaris.

Backing Only Tech & Tech-Enabled Businesses: We only back companies that are either creating technology and selling them (like software products), or are using technology to sell other products and services. The second category could be online brands, like fintech and healthtech.

Indian Origin Is A Must: We are fishing in the India pond only, which means that one of the significant founders has to be based in India. We are not fishing in a Singapore pond, or the Middle East, or the Silicon Valley. These startups can target the Indian market or any other global market, but they need to come out of India.

Less But More: Within the spectrum of funds, we like to be more concentrated as an entity and hence, make fewer investments. However, we go deeper into those investments and take larger ownerships from time to time.

LP Structure: We have 20 primary investors........

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