We adopt a three-pronged approach towards investing that focuses on delivering superior returns, mitigating risks and executing healthy exits. A prime example of this is Uniphore, now a leading conversational AI player in international markets and one of our early investments in YourNest Angel Fund in 2014 with an entry valuation of US$ 3.5 mn. When we exited in June 2020, Uniphore was valued at US$ 160 mn (and continues to grow). Upon exiting, we delivered an enviable DPI of 62% with this single exit at an IRR of 42.8%.
We also believe in the ‘Transfer of Trust’ principle: the faith reposed in us by our investors is backed by confidence we place in founders as we become partners in their journey: evidence of this exists in one of Uniphore’s co-founders continuing his relationship with us by becoming an advisor for our current startup leaders. By having a significant minority stake, YourNest retains enough room for future dilution and funding options.
We have also created a benchmark through a rigorous and transparent reporting system that is unparalleled in the Indian VC industry.
When we first invested in Uniphore, the conversational AI startup in 2014, it was based in Chennai. Today, its founders operate from USA and Singapore with a global team. Over the years, we worked closely with its founders to co-create a scalable business model. The company, co-founded by Umesh Sachdev and Ravi Saraogi, adapted to market dynamics and pivoted from a ‘Licensed-based’ model to a SaaS proposition. As Uniphore’s enterprise-driven business scaled, it expanded into overseas markets with Ravi relocating to Singapore in 2017 and won validation by serving global corporations. Umesh set up a presence in the US in 2018 to ramp-up business and attract top global talent. It quickly broke into the market with the acquisition of a customer from amongst the Top 10 of Fortune 100 list. The company also saw John Chambers of CISCO (and now JC2 Ventures) coming on board as a lead investor in its Series-B round in 2017.
YourNest’s initial investment in Uniphore in April 2014 was with a commitment of INR 9.9 mn. The product validation encouraged us to double the stake and we increased it further with an investment of INR 62 mn as the company moved to the SaaS model.
At the end of June 2020, the journey of investing with a great team came to its logical conclusion as we exited Uniphore at an IRR of 42.8%, making a 6.6x return. We wish the Uniphore team every success and look forward to seeing them build a global leading SaaS company. In these turbulent times, a profitable cash exit is heartening, and we were delighted to share the proceeds with our investors returning 62% of the fund corpus invested. This also validated our thesis of investing in pre-series A startups with a global vision and a strong team.
In 2010, a company named MyCity4Kids identified a gap in the market around childrenrelated services.
YourNest invested in 2012, after the company successfully rolled out services in a single city and was ready for multi-city replication. The platform was growing well, but it was missing a viral impact for such services. The founding team was open-minded and willing to deliberate; they then decided to launch a blogging platform that leverages the audience of the existing listing platform.
The blogging platform has, since then, enabled millions of mothers to share insights of their own journey to motherhood. Consumer brands began paying a premium for high quality, focused content (e.g. a blog on hygiene can be sponsored by Dettol or a baby food supplements blog by Nestlé) and this enabled them to reach their target audience in one go. To enhance their target audience, the Company rebranded Mycity4kids to Momspresso as the content was being created by mothers around children, but was actually being consumed only by mothers.
In December, 2021, Momspresso was acquired by Honasa Consumer, the parent company of digitally-native brands such as Mamaearth and The Derma Co.
In this Exit, YourNest recorded an IRR of 20.6%, making 4.3x on the overall investment. The return is 6.1x on the initial investment of INR 50 mn that YourNest made in 2012 and 2013.
In 2016, YourNest invested in Singapore-based startup, CoveIoT – an end-to-end smart IoT wearables platform which enables third-party brands to launch their own range of smart products.
Their key differentiators, at that time, were their unique end-to-end IPs in three domains: (a) Scalable Hardware Platform, (b) Application and Cloud Services Framework and (c) Analytics to enhance relevance.
Their first product was a smart watch for urban women that focused on safety, and was co-developed in partnership with Titan Company. CoveIoT continued to strengthen their technology platform which created differentiated value rather than spreading thin limited resources on branding and distribution.
This guidance by YourNest helped CoveIoT in expanding from smart watches to jewellery, accessories and apparel. It increased their tech focus and the company even unveiled its own smart wearable operating system at CES 2018, with innovative features in safety, fitness tracking and health.
By 2021, the company had over 30 patents, more than 5 mn global users with 20+ brand partnerships providing health and wellness solutions.
In Jan ‘22, CoveIoT was acquired by BoAt India’s Singapore vertical. While it is a matter of pride that an Indian brand has acquired CoveIoT’s technology to take it global, in this Exit, YourNest recorded an IRR of 26%, making 2.8x on the overall investment and 4.5x on the initial investment.
In August 2020, we completed a second exit with SmartQ, a digital cafeteria software startup in which we had invested in February 2016, being acquired by a strategic acquirer.
SmartQ had identified an opportunity to eliminate queues/waiting period from the face of this world and build an m-commerce model around it by capitalising on digital-friendly users. It started with a mobile app enabling users to order food from service outlets in food courts within 20 seconds. SmartQ’s technology tools helped it to win corporate clients and adoption of this technical know-how by one-of-the largest global players who provide food to the corporate sector – the
UK-based Compass Group. To strengthen its business model, SmartQ had acquired Nextup in late 2018, to integrate an end-to-end cafeteria marketplace.
In the last few months of the COVID-19 pandemic, it further automated the cafeteria experience by offering a decongestion solution and cashless food ordering with its Caf Pass application. A focused play made SmartQ relevant for strategic acquisition within four years of our partnership.
YourNest’s initial commitment in SmartQ was with a commitment of INR 30 mn in 2016 for 14.9% shareholding. We had followed up by increasing our stake to 18% with some of our LPs also participating in the round.
With these two cash exits, we have succeeded in returning 70% of the Fund I corpus to our investors and look forward to more such exits as well.
In Fund I, of the US$ 14 mn corpus, 40% participation is by institutional investors led by the Government of India’s Ministry of Finance (MoF) via SIDBI. In addition, IIFL Seed Venture FoF and Northgate Capital from Silicon Valley have also participated.
In Fund II (US$ 30 mn corpus) we earned the trust of existing investors in Fund I contributing 40% of the corpus. The Sovereign Funds’ participation increased to 35%, with the Ministry of Electronics and IT (Meity) participating via Canbank Ventures in addition to MoF. Local and global family offices contributed 27%, and international LPs another 25% of the corpus.
With NIIF (National Investment & Infrastructure Fund) investing 20% of the US$ 75 mn corpus in YourNest Innovative Products Fund III, we now have our Anchor Investor on board.
Between both funds, YourNest has had the privilege of being associated with marquee VCs and PE funds who have either co-invested in our portfolio of startups or have come on board as follow-on investors.