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October 05, 2016

2016 turning into Party Year for Venture investors

Despite the marked cooling off in the pace of investments, 2016 is turning out to be a good year for exit activity for Venture Capital investors in India. So far, the year has recorded 53 venture exits worth $1.3 Billion (compared to 65 deals worth $1.5 Billion for the whole of 2015).


While the year has seen its share of acqui-hires and other forms of not-necessarily-profitable exits, 2016 is already the best year for profitable exits in the last 5 years (using returns of over 2 times invested capital as the filter).


Another promising feature about the 2016 exits is the rising size of the deals.  The year has seen 11 exits worth $25 Million or more - at least partly answering critics who point to the large amounts of venture capital being invested (and hardly much being harvested).



2016 has also thrown up multiple routes for VC investors to exit profitably - including M&A options like Strategic Sales (CitrusPay acquisition by PayU being an example); Secondary Sales (like TA Associates' buy out of Matrix Partners' stake in TCNS Clothing) and even a merger with a Blank Check Firm (Yatra.com). The buoyant primary market has also indeed helped the cause in 2016 - with early investors in Equitas Holdings, Ujjivan Microfinance and Teamlease Services selling their stake via the companies' IPOs in exchange for over $330 Million in cash.

Quikr, which has acquired eight companies in less than 12 months, been has accounted for three of the VC exits in 2016, replacing companies like Snapdeal, Housing.com, Flipkart that were the busy acquirers in 2015.


The latest spurt in exit activity has helped firms like Sequoia Capital India and Matrix Partners India realize healthy returns from their legacy non-tech portfolio companies (Equitas Holdings and TCNS Clothing respectively). (Related: The Economic Times has profiled Sequoia Capital India's good run in recent months using Venture Intelligence data.) The mega billion dollar question of course is whether the Poster Children of the Indian tech startup world - Flipkart, Snapdeal, Ola, Paytm and others - will generate actual cash returns for their investors. Watch this space!



Coverage by the Mint:




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.