{"id":5406,"date":"2024-03-21T02:12:27","date_gmt":"2024-03-21T02:12:27","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/03\/21\/startup-secondary-deals-rise-nexus-md-steps-down\/"},"modified":"2024-03-21T02:12:27","modified_gmt":"2024-03-21T02:12:27","slug":"startup-secondary-deals-rise-nexus-md-steps-down","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/03\/21\/startup-secondary-deals-rise-nexus-md-steps-down\/","title":{"rendered":"Startup secondary deals rise; Nexus MD steps down"},"content":{"rendered":"
\"Startup<\/div>


\n<\/p>\n

Venture capital investors at late-stage startups are looking for exits amid increasing pressure to deliver returns. This and more in today\u2019s ETtech Morning Dispatch.<\/p>\n

Also in this letter:<\/span>
\u25a0 Indian IT grabs global PE attention
\u25a0 PM Modi at Startup Mahakumbh
\u25a0 Jensen Huang on India and AI<\/p>\n

\n

VCs looking for partial exits, investors eyeing IPO-bound firms push up secondary deals<\/p>\n

<\/div>\n

With pressure to clock returns amid a prolonged slump in the technology market, venture capital investors are demanding exits<\/a> from late-stage startups. In the past year, sizeable investment rounds of $50 million have included a significant secondary component that provides liquidity for pre-existing investors, industry executives told ET.<\/p>\n

What\u2019s happening?<\/span> Industry sources told ET that existing investors in mid-scale startups are demanding exits even at reduced valuations. A Bengaluru-based startup offering supply chain solutions for retail businesses \u2014 last valued at around $300 million \u2014 is facing a major valuation cut, along with ongoing discussions for secondary deals, an executive told ET. <\/p>\n

\"Secondary<\/div>\n

Why it matters: <\/span>Meanwhile, venture funds, counting themselves among the earliest ones to have taken bets on the Indian startup boom in the previous decade, are being asked by their backers \u2014 limited partners \u2014 to deliver returns. <\/p>\n

\u201cInvestors are in a baton exchange game\u2026we invest early, and then the growth-stage investors come in,\u201d said TCM Sundaram, cofounder of early-stage venture capital firm Chiratae Ventures, and among the first backers of Lenskart.<\/p>\n

Jargon buster: <\/span>A secondary deal is between existing and incoming investors, and the cash doesn\u2019t go into the company. Some prominent deals in 2024 include:<\/p>\n

The bottom line:<\/span> Investors told ET there is a pickup in demand for secondary stakes in companies that are approaching potential initial public offerings (IPOs). Long-term investors are looking to derive public market value by acquiring stakes from venture capital firms with a comparatively shorter fund life. <\/p>\n

\u201cThe supply was always there. I think the more realistic readjustment of valuation has created the demand for secondaries,\u201d Prashanth Prakash, partner, Accel, told ET.<\/p>\n

\n

Nexus MD Sameer Brij Verma quits to open multi-stage fund<\/p>\n

\"Sameer<\/div>\n

Sameer Brij Verma, one of the managing directors at Nexus Venture Partners, is likely to leave the VC firm to start his investment fund<\/a>, sources told ET. <\/p>\n

Driving the news:<\/span> Verma is in talks to launch a multi-sector, multi-stage fund that will dabble in public markets. It will also take a diversified approach towards early-stage investments, sources added. The fund size he\u2019s looking at is anywhere between $150-200 million, said people in the know. His upcoming venture will look to hire executives who will work closely with the portfolio firms, a source told ET. <\/p>\n

\u201cThe focus will be to bring in people who can help on the operating side. The strategy is to prepare startups to go public in 5-6 years with a valuation of $500-600 million.\u201d<\/p>\n

Background: <\/span>Verma\u2019s 13-year stint at Nexus saw him invest in startups like enterprise unicorn Postman, edtech platform Unacademy, and Infra.market, which sells construction materials. The focus was on consumer tech, enterprise, SaaS, healthcare, and business-to-business (B2B) commerce verticals. <\/p>\n

Tell me more: <\/span>Verma is expected to start marketing his fund among potential domestic and global limited partners (sponsors of funds) later this year. \u201cThis is a solo partner fund with the option of going beyond technology and consumer deals, which is mostly the remit of pure-play VC funds… The cheque sizes will start at $4-5 million but can go up to $10-12 million for scaled companies,\u201d the source added.<\/p>\n

Also read | <\/span>2023 Year in review: VC funds see heightened churn amid performance pressure<\/a><\/p>\n

\n

Global PEs eye a bigger pie of India\u2019s software services sector<\/p>\n

\"private<\/div>\n

Global private equity (PE) firms and PE-backed entities are showing more interest now in acquiring Indian information technology<\/a> (IT) and software services companies. This has been fuelled by a substantial increase in growth capital investments within the IT services sector by global PE funds. <\/p>\n

Data decoded:<\/span> The number of PE firms holding stake in Indian IT services companies had doubled between 2019 and 2022 to more than 50, as per data from Avendus Capital. According to GrowthPal, an M&A deal sourcing platform, inbound deals from global investors betting on Indian firms rose 35% in 2023, faster than the previous year\u2019s 25%.<\/p>\n

\"Indian<\/div>\n

Why the shift?<\/span> Industry executives said one of the reasons for the interest could be because Indian IT firms are trading at a premium to their global counterparts due to their growth performance and potential. <\/p>\n

Additionally, large startups have become risky due to corporate governance and sustainability issues, leading to increased interest in the IT space where \u2014 even though these deals involve small and midsize firms \u2014 the models are time-tested.<\/p>\n

Verbatim: <\/span>\u201cWe are witnessing an increasing demand from Indian players looking to buy small to mid-sized IT services companies globally to get access to global clients, expand new geographies, build onshore and nearshore teams, and have a global footprint,\u201d said GrowthPal CEO Maneesh Bhandari.<\/p>\n

\n

Other Top Stories By Our Reporters<\/p>\n

\"PM<\/div>\n

Startup Mahakumbh: PM urges startup founders to mentor young entrepreneurs |<\/span> Lauding the entrepreneurial spirit of Indian youth, PM Narendra Modi on Wednesday asked successful founders <\/a>to give back to society by supporting young entrepreneurs and academic institutions. <\/p>\n

India\u2019s IT will be the \u2018front-office\u2019 of world\u2019s AI revolution: Nvidia’s Jensen Huang |<\/span> India\u2019s technology professionals are emerging to be the \u2018front-office\u2019<\/a> of the world’s artificial intelligence (AI) revolution by reskilling themselves with AI-native skills, Nvidia chief executive Jensen Huang said. \u201cIndia has the largest population of IT professionals, there is no question they will be reskilled for AI.\u201d<\/p>\n

\n

ETtech Done Deals<\/p>\n

\"Pocket<\/div>\n

Pocket FM cofounder and CEO Rohan Nayak<\/em><\/p>\n

Pocket FM secures $103 million in funding:<\/span> Pocket FM, a leading audio entertainment platform, has raised $103 million in Series D funding<\/a> led by Lightspeed with participation from Stepstone Group. The latest round brings Pocket FM\u2019s total funding to date to $196.5 million.<\/p>\n

Ultrahuman raises $35 million:<\/span> Ultrahuman, which sells wearable devices and services that help users track metabolic health, has raised a $35 million financing round in a mix of equity and debt.<\/a><\/p>\n

\n

Global Picks We Are Reading<\/p>\n

\u25a0 Meta just showed off Threads\u2019 fediverse integration for the very first time (The Verge<\/a>)<\/p>\n

\u25a0 AI may not change your job, but it will transform government (FT<\/a>)<\/p>\n

\u25a0 8 Google employees invented modern AI. Here’s the inside story (Wired<\/a>)<\/p>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Venture capital investors at late-stage startups are looking for exits amid increasing pressure to deliver returns. This and more in today\u2019s ETtech Morning Dispatch. Also in this letter:\u25a0 Indian IT grabs global PE attention\u25a0 PM Modi at Startup Mahakumbh\u25a0 Jensen Huang on India and AI VCs looking for partial exits, investors eyeing IPO-bound firms push […]<\/p>\n","protected":false},"author":2,"featured_media":5407,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/img.etimg.com\/photo\/msid-108661991\/Investors%20exits%20ETtech%20thumb.jpg","fifu_image_alt":"","footnotes":""},"categories":[607],"tags":[2699,8962,8961,8427,8960,8959,572,8963,8958,2293,8957,442,8956],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/5406"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=5406"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/5406\/revisions"}],"predecessor-version":[{"id":5408,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/5406\/revisions\/5408"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/5407"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=5406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=5406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=5406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}