The venture capital landscape in India has undergone a dramatic transformation in the last decade. There was a time when merely securing funding and achieving rapid user growth were considered primary success metrics. Today, the conversation has matured, with exits taking centre-stage as the ultimate validation of a VC’s investment thesis, and as a key driver for the entire ecosystem. Investors, both domestic and international, are keenly focused on the path to liquidity, seeking tangible returns that demonstrate the viability and profitability of the Indian startup story. This evolution marks a significant step forward, signalling a maturing market where sustainable business models and strategic acquisitions are increasingly valued.
In this evolving environment, YourNest invests Nurture Capital in every one of our startups, exercising a level of persistence unparalleled among early-stage VCs. Our portfolio companies haven’t just chased fleeting trends; they have focused on creating real, sustainable value, making them highly desirable for companies looking to consolidate markets, acquire cutting-edge technology, or expand their reach; thereby creating an all-round win for our LPs, founders and incoming investors.
Over the last five years, starting with our first exit during COVID-19, we have consistently endeavoured to achieve not just the highest possible return on investment, but also leave incoming investors with adequate potential to deliver a healthy future upside on their own investment. And, for our challengineer-founders, every exit we make opens a new set of doors for them.
However, the narrative of our exits extends beyond just the numbers, actively challenging prevalent stereotypes within the early-stage technology startup ecosystem in India. The following noteworthy aspects highlight our unique approach and the underlying dynamics at play.
Mythbuster 1: DeepTech doesn’t always mean long waits
To start with – contrary to popular perception that DeepTech investments require significantly long gestation periods for an investment to pay off, our exits have occurred at an average of under five years: Uniphore – the first – was a portfolio company for 5 years 3 months; Xpedize saw the earliest exit after just over a year, and UptimeAI scaled up rapidly post our participation in series-A for a healthy overall 5.8x exit in a 3-year holding period. These exits showcase that with the proper selection and strategic guidance, DeepTech investments can indeed yield timely and substantial returns.
Mythbuster 2: Premium valuations are feasible, signalling growing global confidence in Indian tech solutions
Often, YourNest is the first institutional cheque an early-stage startup receives. As part of our nurturing philosophy, we steadfastly encourage founders to go beyond product excellence to address real market needs. And once product-market fit is achieved, founders see merit in scaling beyond India into more lucrative markets. Uniphore’s consistently growing international sales positioned it ahead of the curve in the AI space, leading to an impressive 19.5x exit multiple on its revenues in 2020. In another instance, Westbridge and ABB acquired UptimeAI, paying a 37.5x multiple on revenue, and in a partial secondary sale of our Opkey holding, an 11.2x revenue multiple was registered. At YourNest, we have consistently observed a strong correlation between revenue growth – particularly from global markets – and the resulting return on investment (ROI) for investors.
Mythbuster 3: Physical assets command tangible value… so do intangibles
While traditional wisdom often emphasises the value of physical assets in manufacturing startups, our experience proves that IP-based assets are equally, if not more, valued. We exited SmartQ at a 1.8x MOIC during the peak of the pandemic when office cafeterias worldwide were shut and they had zero revenue. The Compass Group (UK) acquired SmartQ solely for its technology, which today powers unforgettable food experiences across 19 countries. In another instance, Argoid, while facing go-to-market challenges, was acquired by its partner, Amagi Media (a listed entity), which saw significant value in scaling Argoid’s technology under its umbrella, allowing us to recover our capital. Similarly, Arya.ai and Xpedize serve as powerful examples of B2B businesses whose technology was leveraged for growth by strategic acquirers such as AurionPro and Clear (formerly ClearTax), respectively.
Mythbuster 4: Popular D2C companies have little to do with technology startups
In yet another instance of our technology platforms commanding strong valuations, D2C brand MamaEarth acquired Momspresso ahead of its IPO in 2023: one of our first investments, the company had pivoted to a brand-sponsored content platform that attracted India’s largest community of mothers, a vital audience for MamaEarth. This helped us deliver a 20.6% IRR with a 6.1x MOIC on our initial investment. Similarly, leading wearables brand BoAt’s desire for CoveIoT’s technology (with over 30 patents) helped us deliver a 3.2x MOIC on the exit at a 26% IRR. For large brands seeking advanced technologies to secure stronger market positions, our focus on helping founders build and register core patents helps deliver higher exit multiples.
Mythbuster 5: Incoming late-stage investors assess startups only on the basis of their current state
As early-stage VCs, our core mandate includes nurturing fledgling founders to a stage where we can successfully pass the baton to larger VCs. Secondary sales (fully or partially) of our stake to prominent investors including Iron Pillar, JCEP, Sistema and March Capital in Uniphore, WestBridge and ABB for UptimeAI, and Peakspan for Opkey were possible only because each of these incoming investors recognised significant potential for future returns on their investments. Timing remains a critical determinant of every successful exit, and our experience has consistently validated this principle.
YourNest: Investing in enduring value
At YourNest, we firmly believe that an exit is not a mere afterthought but an intrinsic element of the business-building journey. We collaborate closely with our portfolio companies from their nascent stages, providing not just crucial capital but also strategic guidance, invaluable mentorship, and access to our extensive network. Our aim is to help them construct businesses that are not only successful in their own right, but also possess strong strategic appeal for potential acquirers.
Our consistent track record of delivering exits underscores our unwavering commitment to generating significant value for our investors and contributing to the progressive maturation of the Indian venture capital ecosystem. We are confident that by maintaining our focus on nurturing robust, sustainable businesses with clear strategic advantages, we will continue to deliver strong returns and play a pivotal role in the dynamic growth narrative of the Indian startup landscape. The full circle of the VC ecosystem, with exits now commanding centrestage, validates our long-standing conviction in building businesses that strategics actively seek – and we are enthusiastic about the opportunities that lie ahead.