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July 20, 2016

Challenges for VC Exits: Mint

A Mint article titled Yatra, CaratLane deals put spotlight back on VC exits quotes Venture Intelligence data to highlight trends in this segment:

There have been 19 exits till date this year, data from Venture Intelligence shows, and, expectedly, the conversation has shifted to whether venture capitalists (VCs) invested in India are seeing their first real exit season.
Challenges to Exits for VC-backed companies (accordingly to the article):
  1. The proportion of M&A activity to VC investments in US/Israel is 4:1 or 5:1 compared to India's 1:1 leading to poor liquidity in the system - Nitin Bhatia, Signal Hill

  2. Most Internet companies in India are yet to show profits (many don’t even have a path to profitability), which rules out a public markets listing as an exit route for investors - Satish Andra, Endiya Partners. In 2015 alone, the US saw 28 tech IPOs. (Recent Indian tech IPOs in 2015-16 are Quick Heal Technologies, Infibeam and Ortel Communications.)

  3. India is still a very young market compared to other developed venture markets in the West. The exit horizons will tend to be long - Farooq Oomerbhoy, FAO Ventures
However also experts opined that a lot of fresh capital with strategic intent is sitting on the fence as investors view India as being where China was 10 years ago. Companies like Alibaba, Tencent and Baidu are yet to make large acquisitions here.

Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.