The Venture Intelligence Blog

Unitus Ventures has put up some interesting data and charts on the typical capital invested, valuation and equity dilution that startups - especially impact focused ones - witness in the Indian context (including at the time of exit).  In the lowest-case $20M exit, founders plus employees are making a little over $1M, while financial investors are making a tiny multiple or losing money. At the rather optimistic exit valuation of $60M, founders plus employees take home nearly $11M, and each series of investors make a fine total return, achieving overall objectives. ..life is pretty good for pre-seed investors in any exit on this chart, and they make 19-52x return between $30M and $60M. Seed investors...don’t make a ~10x return in this model until a $60M exit is achieved.  Series A investors who have a similar risk profile and return potential only see a 5x return at $60M exit. ...There have been very few examples of venture-funded businesses achieving over $50M e...

The Lessons E-Commerce Entrepreneurs & Investors Should Learn from their Microfinance Peers In an article for  Economic Times , Private Equity investor Vivek Singla points why blaming the measurement parameter Gross Merchandise Value (GMV) for the ills of the E-Commerce is not productive. He recommends E-Comm Entrepreneurs and Investors take a leaf out of how the Microfinance industry emerged from its regulatory crisis - by resetting their valuation expectations. For the investors, one of the reasons behind the sharp reversal in sentiment is the build-up in bitterness against the GMV, with many now labelling it as a pure vanity metric...instead of being dismissive about the GMV and e-tailing at large, investors should augment the gross dollar spend with deep dive into the business performance. After all, GMV is an important component of the due diligence checklist, but not the only one.  ...most international GMV based trailing multiples fall below 1×. On the ot...

A Hindu Businessline article by Meera Siva uses Venture Intelligence data to track valuation trends: Down rounds and exits are not new for Indian start-ups.  Venture Intelligence data show that many companies had raised funding at reduced share price in the 2013-15 period as well. For example, Fashion and You, backed by VC firms such as Norwest Venture Partners, Intel Capital and Sequoia Capital India, saw a deep discount to its November 2011 valuation, during its June 2014 funding round.  The acquisition of Commonfloor by Quikr is said to be at a discount to the $160-million valuation that Google Capital funded it at. Likewise, Baby Oye’s acquisition by the Mahindra group is another exit that is said to have led to losses and write-offs for investors such as Accel Partners and Tiger Global. The article further states that  one can expect the following trends going forward: 1. Fire sales for weak businesses may continue 2. Sliding valuations may only pinch B2C...

A BusinessWorld article  by Paramita Chatterjee uses Venture Intelligence data on Startup acquisitions and markdown in valuations of Flipkart and Zomato as "early signs of shakeout or consolidation in the industry". As per data available with research firm Venture Intelligence , as many as 139 acquisitions took place in the startup space in 2015, more than double the number of startup acquisitions that were sealed in 2014. In 2013, as many as 42 startups were acquired by the biggies in the sector and the number is only expected to grow! 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.  Click Here to Sign Up for the FREE Edition of the Deal Digest: India's First & Most Exhaustive Transactions Newsletter.

In an interview to Mint , Aswath Damodaran - the well known US-based valuations expert  - has opined that India’s e-commerce and consumer technology start-ups "may be collectively overvalued". "The size of the macro story may not justify the micro-valuations," he says. Economic Times (in its Corporate Dossier supplement) had earlier featured the views of two local practitioners - Sharad Sharma, Angel Investor and Jacob Mathew, Founder of MAPE Advisory - on the same topic. Sound Byte from Sharad Sharma : "Unfortunately, due to just one individual - Lee Fixel of Tiger Global - Flipkart has gone from being a poster child to being the single biggest risk to the technology ecosystem."  His main argument: Right now, Flipkart is valued at about $500 per transacting user. This is comparable to what Vodafone paid for Hutch in 2007 - the most expensive mobile operator acquisition ever. Built into the Vodafone offer at that time was a belief that the hocke...

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Q: What do you call a $100 million plus investment by Hedge Funds, Mutual Funds and other typically  public market investors, in Startup companies?  A: "A Private IPO"  (to put a small spin on term coined by Josh Kopelman, CEO of US-based First Round Capital) Q: Isn't IPO short for Initial Public Offering? A: Well, fuddy duddy, welcome to Tech (Bubble / Not Bubble / Bubble / Not Bubble) Land. As of now, anything - including seeming Oxymora - goes. In these unusual times, Indian startups dominate list of cases cited by investors in Asia and other parts of the world. Here's an extract (emphasis mine) from a post titled " Alert: Venture Capital Tsunami in South Asia " by Piyush Chaplot , Partner at Singapore-based Innosight Ventures : Strategic investors such as Softbank, Rakuten, Alibaba, Naspers, etc. are throwing money as if there is no tomorrow. Sovereign Wealth Funds such as GIC, Temasek, QIA and Khazanah want their share of the pie. Even Pri...

And other vignettes from TiECon Chennai-2012 "I'm going to just stay still like you," said the rabbit to the owl on the tree branch above. And proceeded to stay still. Just then, a fox happened to pass by and got to enjoy a nice (effortless) dinner. - Satguru Jaggi Vasudev to emphasize that entrepreneurs can afford to delegate depending on the level at which their company is. (If the company is operating at a vulnerable level - like the rabbit - then they better be "running around" focusing on even the smallest details. But if the startup has taken off, they can afford to perch themselves and run their companies with an owl's eye view.) Keep your eyes on the immediate next milestone (say, Series A funding) and focus on what you need to get there. Everything else is a distraction. - K. Ganesh , Founder of TutorVista & CustomerAsset You have one life to live. And it is too short to worry about building a legacy and be wedded to one company forever....

Cross Posted from the Venture Intelligence Entrevista blog : Latha Rajan & K. Pandia Rajan of Ma Foi ( B i o s ) In conversation with K. Satyanarayan , Co-founder of regional language publishing firm New Horizon Media. (Recorded on August 15, 2012 in Chennai.) Highlights: Takeaways for Other Entrepreneurs: (Click on the links for the video segments) Don't add artificial constraints when it comes to entrepreneurship KPR: Separating home and work, politics & business - we tend to have many boundaries where none need to exist. These are Western notions and mind blocks that we can revisit. Being a Husband-Wife Entrepreneur Combination was never a major hassle for us. In fact, as Latha says often, we would have probably fallen apart but for Ma Foi! Latha Rajan: In the early days, he used to travel 25 days a month and I used to travel 10 days a month. But since I was there within the system, I could understand (the pressures and issues). Both of us knew what we were workin...

Former IDFC PE CEO Luis Miranda has started a on the Forbes India web site with a post on (what else?) valuations. And, given the topic, it's no surprise that several PE professionals have chimed in with comments. It doesn’t make sense for investors to get a “cheap” deal or for entrepreneurs to con investors into paying too high a price. If this happens there is no true partnership and as the comedian Russell Peters said, “Somebody gonna get a hurt real bad”. India is a high-growth economy, irrespective of what foreign investors say and what the government does or does not do. And in a high growth economy it is even more difficult to predict future prices, volumes, competition, etc. So, if there is a serious valuation mismatch one has to look at structures to bridge the gap–if the entrepreneur wants too high a valuation, a structure can be worked out where if targets are not met, the investor’s shareholding in the company ratchets up. Alternatively, and this is a framework that I ...

Extracts from the interview appearing in the latest issue of the Indian Angel Network's newsletter: As far as E-Commerce is concerned, it is becoming a big money game and you will see companies either succeed massively or blow up in style. What is somewhat worrisome is the tendency of some E-Commerce companies to scale up sales even if they are negative margin, the more you sell the more you lose. Investors also need to ask probing questions about revenue recognition practices. There are some smoke and mirrors out there. I expect sanity to return to this space sometime in the next two years. Excessive valuations will be corrected. The smoke will clear and dodgy accounting practices will be recognised for what they are. People will not be selling below variable cost anymore. ...For the most part people are starting off aping successful businesses in the West. You can’t blame the entrepreneurs alone for this, since these are also the models for which funding comes easier because the...

Anand Lunia of Seedfund has an article touching upon this at StartupCentral .