There is no greater sporting spectacle than the Olympics: it remains the ultimate goal for any athlete. In this aspect, a sportsman aiming for an Olympic medal is akin to a startup founder: both enter the field with a burning passion to accomplish something that no one has done before them. Failures and defeats strengthen both, and both believe in that magical thing called timing.
We are fortunate to be living in a historic time in India’s startup eco-system when most investors who were awaiting to see how and when VCs would begin delivering cash exits for their early finds. 2021 has already started with a record number of IPOs from young entrepreneurs who have scaled and demonstrated an unwavering commitment to their mission. At the same time, we are also witnessing acquisitions of startups by legacy business houses and domestic corporations in addition to the well-funded startups themselves. The size of cash acquisitions touching US$ 1 bn or a Zomato IPO raising over US$ 1.25 bn has set new benchmarks for startups to cross. Clearly, the Indian eco-system has matured and is now at an inflexion point – for investors who supported these entrepreneurs, their patience is now being handsomely rewarded.
This accelerated pace is already evident in the number of Unicorns being added every year: from 8, 11 and 12 respectively in 2018, 2019 and 2020, the first seven months of CY 2021 have seen 17 joining the league. It is further supplemented with exits similar to Dragons (a company that returns entire fund in an exit – ‘a fund maker’) in startups such as Uniphore (YourNest: 16x/6.6x), Purple (Ivy Capital: 22x), PolicyBazaar (Inventus: 22.3x), WhiteHat Jr (Nexus: 14.4x) and boAt (Fireside part exit to Warburg Pincus).
International studies have shown that having a Dragon in the portfolio is 4-10 times more complicated than a Unicorn. At YourNest, we too have played a role in the coming of age of this alternate investment class: with two exits in 2020 that enabled us to return 70% of the Fund I corpus, and with several potential exits lined up, we are in a commanding position. Currently, in Fund I, we count Momspresso and Opkey as emerging Dragons. Similarly, in Fund II, Miko, Dozee, Practically and Cron AI are probable Dragons. Miko, for example, has seen a 10x increase in its overall valuation since we invested in 2018 and is now present in over 140 countries.
Keeping in mind the increase in the velocity of cash exits, we have now launched ‘YourNest Innovative Products VC Fund III’ with a corpus of US$ 75 mn and a focus on early-stage startups in DeepTech/AI/IoT/SaaS.
In conclusion, I would like to return to the theme with which I started this report: timing. All indications are that 2021 is a landmark year for startup investments, and as an alternate investment class, early-stage funds are bound to perform exceptionally well. For any investor, there is no better time than now to enter the field.
The team at YourNest, along with our family of Challengineer-founders, thanks you for your support and joins me in wishing you safety and good health always.
Sunil K. Goyal
Managing Director & Fund Manager
August 18 2021