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March 27, 2024

Chiratae Ventures Makes $70 Million Exit: Sells Stakes in Key Startups to Madison India Capital

Chiratae Ventures Executes $70 Million Stake Sale to Madison India Capital in Secondary Transaction

In a strategic move, early-stage investor Chiratae Ventures has concluded a significant transaction, offloading stakes in several prominent portfolio companies to private equity firm Madison India Capital for a reported $70 million. Among the startups affected by the sale are industry leaders like Lenskart, Bizongo, and Rentomojo, all of which Chiratae had invested in through its Fund II and Fund III.

According to sources cited by ET, the deal represents a bulk secondary transaction and was finalized several months ago as part of Chiratae’s decision to divest shares in select companies. The reported $70 million cash exit signals a profitable return for Chiratae Ventures, particularly considering the relatively modest size of Funds II and III.

Despite attempts to obtain comments from Chiratae Ventures, the company remained silent on the matter as of the time of reporting.

This development occurs against the backdrop of a challenging landscape for venture capitalists in India, with many struggling to realize substantial returns on their startup investments. The venture capital ecosystem has faced sluggish returns over the past year, prompting investors to adopt more cautious investment strategies. Consequently, there has been a growing trend towards secondary sales as a means for investors to secure partial exits from their portfolios. Recent examples include discussions among investors of ecommerce unicorn Meesho regarding potential stake divestments.

In a similar vein, US-based investors of Eruditus sought an exit during the startup’s $150 million fundraising endeavor in September.

For Chiratae Ventures, this marks another instance of divestment through secondary transactions, following its majority exit from Lenskart during the eyewear unicorn’s $400 million funding round in 2022, which was led by the Abu Dhabi Investment Authority (ADIA).

Meanwhile, this represents the second occasion on which Madison India Capital has augmented its portfolio through secondary stake transactions. In 2017, the firm acquired eight portfolio companies from Peak XV (formerly Sequoia Capital) for $180 million.

Madison India Capital, backed by Lexington Partners—a specialist in secondary transactions—boasts an impressive portfolio that includes companies such as Pine Labs, Gupshup, and CarDekho. Notably, the venture capital firm has already incorporated startups backed by Chiratae Ventures, such as Lenskart, Rentomojo, and Bizongo, into its investment portfolio.

The transaction underscores the dynamism of the Indian startup ecosystem, with strategic maneuvers reshaping investment landscapes and facilitating growth opportunities for both investors and startups alike.

Jhumpa Lahiri

Jhumpa Lahiri

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