A Venture capital market- The year that went by Venture capital market: The year that went by BY...
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Wake2o Ltd | 16th September Square | Mosta MST 1180 | Malta ||www.wake2o.com| [email protected] A Venture capital market: The year that went by BY Snigdha Sengupta Last Modified: Sat, Dec 24 2016. 07 41 PM http://www.livemint.com/Opinion/wV4vxSSYXiCCrc5kqdRtlN/Venture-capital-market-the-year-that-went-by.html A glance at some of the highs and lows that marked the country’s venture capital market in the past 12 months Adversity brings out the best or the worst in people. The downturn in India’s start-up funding market over the past 12 months brought out the worst in the founders of some of the country’s most valuable start-ups. Strapped for capital and under assault from foreign competitors with deep pockets, such founders came down to playing the nationalist card and seeking the government’s help in keeping non-Indian players out of the market. For India’s venture capital industry, on the other hand, the downturn has been
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Transcript of A Venture capital market- The year that went by Venture capital market: The year that went by BY...
Wake2oLtd|16thSeptemberSquare|MostaMST1180|Malta||www.wake2o.com|[email protected]
AVenturecapitalmarket:Theyearthatwentby
BYSnigdhaSenguptaLastModified:Sat,Dec242016.0741PMhttp://www.livemint.com/Opinion/wV4vxSSYXiCCrc5kqdRtlN/Venture-capital-market-the-year-that-went-by.html
Aglanceatsomeofthehighsandlowsthatmarkedthecountry’sventurecapitalmarketinthepast12monthsAdversitybringsoutthebestortheworstinpeople.ThedownturninIndia’sstart-upfundingmarketoverthepast12monthsbroughtouttheworstinthefoundersofsomeofthecountry’smostvaluablestart-ups.Strappedforcapitalandunderassaultfromforeigncompetitorswithdeeppockets,suchfounderscamedowntoplayingthenationalistcardandseekingthegovernment’shelpinkeepingnon-Indianplayersoutofthemarket.ForIndia’sventurecapitalindustry,ontheotherhand,thedownturnhasbeen
Wake2oLtd|16thSeptemberSquare|MostaMST1180|Malta||www.wake2o.com|[email protected]
atimetointrospect,salvage,consolidateandrebuild.Welookatsomeofthehighsandlowsthatmarkedthecountry’sventurecapitalmarketinthepast12months.1.Theyearstartedintheshadowofthefirstseriousdownturnthatthismarkethasseeninthedecadesinceventurecapitalre-establisheditsrootshereasanassetclass.Hedgefunds,whichfannedavaluationbubbleinthestart-upfundingmarketfornearlytwoyears,hadfledlatelastyear,leavingbehindayawninggapinthelate-stagefundingmarket.Hedgefundsmayhavedesertedthestart-upmarketbutgloballimitedpartners,institutionalinvestorswhobackventurecapitalfunds,stayedcommitted,infact,uppedtheircommitments.Twoofthecountry’sbiggesteverventurecapitalfundswereraisedinthelast12months.InFebruary,SequoiaCapitalIndia,thecountry’slargestventurecapitalfirm,raisedamassive$920millionfund,dwarfingevensomeofthebigprivateequityfundsraisedherelately.Lastmonth,AccelPartnersIndiaclosedcommitmentsfora$450millionfund,onlythesecondfundofthatsizesincetheoneraisedbyNexusVenturePartnersinDecemberlastyear.Limitedpartnercommitmentshavealsoflowedintosmallerfunds.InMay,Bengaluru-basedSaamaCapitalraiseda$31millionthirdfund.InOctober,Mumbai-basedBlumeVenturesclosed$60millionincommitmentsforitssecondfund.ByLondon-basedresearcherPreqin’sestimates,asofSeptember,India’sventurecapitalindustrywassittingondrypowder,oruninvestedcapital,worthmorethan$3billion.2.Limitedpartners,however,remainconcernedaboutpoorreturnsontheirpastinvestments.Inabidtoalleviatethoseconcerns,fundmanagersatventurecapitalfirmswentintooverdrivetoshoreupexits.Thenumbersfortheclosingquarterof2016areyettocomein.However,intheninemonthsoftheyearendedSeptember,venturecapitalfirmsclosed54exitdealsworth$1.41billion,exceedingthe43exitdealsworth1.39billionclosedinallof2015,accordingtodatacompiledbyChennai-basedresearcherVentureIntelligence.Theexitrunisn’tyetasrobustasbothlimitedpartnersandfundmanagerswouldlike,butahandfulofdealssetthisyearapart.InJuly,onlinetravelservicescompanyYatradeliveredapartialexittoitsinvestors,NorwestVenturePartners,TV18GroupandValiantCapital,whenitstruckareversemergerwithNasdaq-listedspecialpurposeacquisitioncompanyTerrapin3AcquisitionCorp.Thedealinvolvedan$80millioncashpayouttoYatra’sinvestors.YatradebutedonNasdaqthisweekfollowingthecompletionofthemerger.AnothersignificantdealwastheAugustacquisitionofpaymentscompanyCitrusPaymentsSolutionsbySouthAfricaninternetconglomerateNaspersina$130millionall-cashdeal,arareeventinIndia’sventurecapitalmarket.ThedealwasabigpaydayforSequoiaCapitalIndia,whichhadinvestedabout$10million
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overthreefundingroundsforareported32%stake.Theofflineretailsectorservedupasurprisebigexit—inAugust,privateequityfirmTAAssociatesboughtanundisclosedstakeinwomenswearmakerTCNSClothingCo.for$140million.MostofthatwentintobuyingMatrixPartners’undisclosedstakeinthecompany,earningtheventurecapitalfirma5xreturnonitsoriginalinvestment.3.Notallexitswerehappyevents.Asventurecapitalfirmsgottoworkconsolidatingtheirpastinvestments,firesales,write-offsandstock-swapdealswereequallyvisiblethroughtheyear.ThingskickedoffearlywiththemuchspeculatedJanuaryacquisitionofpropertysearchandlistingsplatformCommonfloorbyonlineclassifiedsplatformQuikrinareportedall-stockdeal.ThedealgaveCommonfloor’sbackers,TigerGlobalManagement,AccelPartnersIndiaandGoogleCapital,whocollectivelyinvestedmorethan$60millioninthecompany,stakesinQuikr.InMay,anothertroubledstart-up,TinyOwl,wasusheredintoastock-swapmergerbyitsinvestors.TheonlinefoodorderingservicemergedwithhyperlocaldeliveryserviceRoadrunnr.ThecombinedentitynowoperatesasRunnr,withSequoiaCapital,NexusVenturePartners,MatrixPartnersandBlumeVenturesasinvestors.Thefourventurecapitalfirmshadcollectivelypumpedcloseto$40millionintothetwocompaniespriortothemerger.RocketInternet,theBerlin-basedstart-upincubatorandinvestorwasinvolvedintwodealsthatarewidelybelievedtobedistresssales.InApril,itsolditsonlinefurniturestoreFabFurnishtoKishoreBiyani’sFutureGroupforanundisclosedsumandinJuly,onlinefashionstoreJabongwaspickedupbye-commercecompanyFlipkartforjust$70million,amassiveerosionfromthe$503millionJabongwasvaluedatin2013.TheothernotabledistresssalethisyearwasTitan’sacquisitionofamajoritystakeinjewellerye-tailerCaratlanefor$53millioninMay.ThedealjustaboutenabledCaratlane’sbackerTigerGlobaltocoveritsreportedinvestmentof$52million.Bymostaccounts,theconsolidationandcleaningoutofportfoliosisstillwellunderwayandwillcontinuewellintothenextyear.Theportfoliotowatch,though,willbeNewYork-basedhedgefundTigerGlobal’s60-oddstart-upinvestmentshere,includinge-commercebellwetherFlipkart.4.ThestickyissueofleadershiptransitionintheventurecapitalindustryfounditselfinthespotlightthisyearintheaftermathofabitterspatinDecemberlastyearwithintheinvestmentteamatHelionVenturePartners.HelionisoneofIndia’soldesthome-grownventurecapitalfirmsanditcameapartattheseamswhenitssecondlineofpartners,AlokGoyal,RahulChowdhriandRiteshBanglani,quitthefirminahuff.Theyoungerpartnerswantedmoreofasayinhowthefirmwasrunandagreatershareofprofits.Thefoundingpartners,SanjeevAggarwal,RahulChandraandAshishGupta,didn’tsharethatview.The
Wake2oLtd|16thSeptemberSquare|MostaMST1180|Malta||www.wake2o.com|[email protected]
standoffexposedthefragilepowerequationsthatexistinwhatisstillafairlynascentindustry.Theincidentservedasawake-upcalltoseveralotherventurecapitalfirmsthathavebeenaroundaslongasHelionandwillhopefullydetersuchuglyandpublicquarrelsinfuture.5.Sometimes,eventheugliestfightshavegoodoutcomes.Helion’sGoyal,ChowdhriandBanglanihavesincestartedupontheirownwithStellarisVenturePartnersandareinthemiddleofraisingtheirdebutfund.Earlierthisyear,SAIFPartnersprincipalsMukulSinghalandRohitJainbrokeawayfromthefirm,amicably,tostarttheirownseedinvestments-focusedventurecapitalfirmPravegaVentures.Earlier,formerVentureastpartnersSateeshAndraandRameshByrapanenistruckoutontheirowntolaunchEndiyaPartners,focusedonseedandSeriesAinvestments,andraisedinitialcommitmentsfortheirdebutfundinJanuary.Whenseasonedfundmanagersstrikeoutontheirown,especiallyinthemidstofadownturn,itisthesurestsignofaventurecapitalmarketthatismaturing.SnigdhaSenguptaisaconsultingwriterwithMint.Shecontributesstoriesonventurecapitalandprivateequity.
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