The quarter gone by has been quite mixed in terms of the way the ecosystem has evolved.
On the brighter side, there were things like more and more companies getting into the USD 100mn valuation window (63 in October 2015 vs. 39 companies in May 2015), and new initiatives by the government in the form of Start up India – Stand Up India.
On the flip side, valuation expectation hit a new high, and your Fund chose to walk away from a few start-up deals due to expectation mismatch with the entrepreneurs. There is even news of some high profile startups shrinking operations due to lack of follow-on investments. While this looks like a downtrend, the softening of valuation – post market over-exuberance – is good in the overall interest of the eco-system and can be viewed as a market correction. And in-spite of the very large number of engineers graduating from Indian Universities, talent availability for tech-teams continues to be a challenge. We hope the situation may start to ease given softening of quick up-rounds in cash burn business models.
Another interesting development is that YourNest’s investment thesis – which is focused on revenue earning business models – is gaining more relevance with every passing phase in the evolution of the VC industry internationally impacting on the selection criteria for investing in businesses. Even as we go to the printers, we continue to pursue due-diligence in Arya (deep learning platform), Momark (customer engagement platform for offline retailers), Aahaa Stores (B2B supplies platform) & OpKey (testing automation platform) in keeping with our investment thesis.
In another development, Oct’15 saw fresh up-rounds in –
- MyCity4Kids (2x of our entry price)
- Simpli5d (3x of our entry price)
- Betaout (1.12x of an accelerator round)
All this will continue to impact positively on the overall NAV of the fund. You may have come across an announcement made on Bookmycab’s merger with Jugnoo, however, the fund raise did not go as envisaged for the merged entity. Since then, we have identified another opportunity and are in an advanced stage for closing the deal with another existing market player.
You may recall that we had on-boarded two institutional investors in June’2015 namely, IIFL Seed Ventures and Northgate Capital. They shall be playing an important role at the Advisory Board level, particularly with a focus on recommending and approving changes in the interest of fund and the investors. In a meeting held on Nov 9th 2015, the advisory board has recommended some changes in PPM. We shall be sending these for your comments and approval shortly.
We at YourNest wish you and your families a happy and prosperous Samvat 2072.
Sunil K. Goyal
November 20, 2015