TURNING IDEAS TO GOLD - Perspectives on Venture Capital for Indian Family Offices - Varindia
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TURNING IDEAS TO GOLD Perspectives on Venture Capital for Indian Family Offices
Summary
10K 140+ ~20% $30Bn
Expected number of ultra- Formalised Family Offices in Portfolio allocation towards Indian Family Offices are
high net worth individuals India that preserve, enhance, Alternative assets (which estimated to contribute 30% of
(net-worth > US$ 30M) in and transition UHNI wealth includes PE/VC) by Indian the estimated $100Bn to be
India by 2024 Family Offices raised by Indian startups by 2025
55K 485 bps 9 12
Number of start-ups launched Higher IRR generated by VC Levers through which VC Crucial checks across team
in India. Home to 56 unicorns, and PE funds raised during funds generate value for their skills, fund reputation, investment
India has added 14 new periods of economic crises GPs – including relationships, strategy, funding capability and
unicorns by May 2021 already relative to the average VC/PE expertise and processes past returns generated while
returns over the period 1995- selecting a fund GP
2016
© 256 Network © Praxis Global Alliance | 1
A new generation of Indians is growing their wealth
UHNIs in India expected to have ~US$ 700B wealth by 2024,
India expected to have ~10K UHNIs by 2024, ~2X of 2019 figures
~1.6X of 2019
No of UHNIs in India UHNI wealth in India
2014-2024P US$ B, 2019-2024P
707
10,354
CAGR
CAGR 10%
12% 440
5,996
CAGR
3,061 14%
2014 2019 2024P 2019 2024P
Notes(s): UHNIs refers to individuals with net worth > US$ 30M, CAGR for UHNI wealth estimated on the basis of past trends from 2013-18
Source(s): The Wealth Report 2020 Knight Frank, Praxis analysis © 256 Network © Praxis Global Alliance | 2
UHNIs from diverse backgrounds are setting up Family Offices
• Family Offices are full-service private wealth management services that serve just one or a small number of ultra-high-net-worth families
• There are 140+ Family Offices catering to Indian UHNIs, 70+ structured and 70+ unstructured Family Offices
• UHNIs are also investing in Indian startup space through their Family Offices
Indian UHNIs setting up Family Offices
1 2 3 4
Business Leaders Indian Celebrities NRIs Digital Entrepreneurs
Several Indian business leaders Media and sports celebrities Several Indian business families Tech and digital entrepreneurs
have set-up Family Offices like: have setup Family Offices and based outside India have setup have set up Family Offices for
invested in many tech startups Family Offices for investments: wealth preservation:
• Azim Premji (Wipro): Premji like:
Invest • Abhinav Jhunjhunwala: AJ • Ritesh Agarwal (Oyo): Aroa
• Rishabh Mariwala (Marico): • Yuvraj Singh: YouWeCan Capital (Singapore) Ventures
Sharrp Ventures ventures • Satveer Singh Thakral: SGAN • Kunal Bahl (Snapdeal): Titan
• Ratan Tata (Tata Group): RNT • Priyanka Chopra Jonas: (Singapore) Capital
Associates Bumble (Direct) • Satpal Khattar: Khattar • Vijay S Sharma (Paytm): VSS
• RK Damani (Damani Group): • Akshay Kumar and Madhuri Family Holdings (Singapore) Holdings and VSS Investco
Brightstar Investments Dixit Nene: GoQii (Direct) • S. Ramakrishnan: Transworld • Sachin Bansal (Flipkart): Navi
• Sachin Tendulkar: Smarton Group Family Office (UAE) • Rajul Garg (Pine Labs): Leo
(Direct) Capital
Source: Primary Research © 256 Network © Praxis Global Alliance | 3
Traditional businesses pioneered structured wealth management…
1
Business Leaders
Arun Sarin BrightStar
Family Office Investments Ltd
(Manipal group) (BSE directors) (ex-CEO,Vodafone) (RK Damani, Dmart)
Bryanston Dilip Shanghvi
(Pidilite group) Family Office
(Narayan Murthy) (Serum Institute ) (Nandan Nilekani)
(Dabur) (Sunpharma)
Lahari
Single Family Office
Family (Uday Kotak) (Lahari Music)
Offices
Mansukhani Mistry Ventures Narotam Sekhsaria
Family Office (Cyrus Mistry) Family Office
(SAR Group) (Hiranandani)
Pratithi
(Kris G, Infosys) (Wipro)
(Patni Computers) (Camlin group) (Rakesh Jhunjhunwala) (Tata Group) (Marico)
Telama Investments Family Office (S.D. Shibulal)
(Shiv Khemka)
Multi
Family
Offices
Note(s): All Family Office names are arranged in alphabetical order, In addition to setting up single Family
Offices, multiple business leaders manage their wealth through multi-Family Offices that cater to multiple families © 256 Network © Praxis Global Alliance | 4
Source: Primary Research
…with the newly wealthy following in their stead
2 Indian Celebrities 3 NRIs 4 Digital Entrepreneurs
Aishwarya Rai Akshay Amitabh
Bachchan* Kumar* Bachchan
(Actor) (Actor) (Actor)
Ritesh Aggarwal (OYO)
Abhinav Jhunjhunwala Abhishek Sharma
(Singapore) (Dubai)
Arjun Ayushmann Hrithik
Kapoor* Roshan Rajul Garg (Pine Labs)
Khurrana*
(Actor) (Actor) (Actor)
Divesh Makan Sat Pal Khattar
(USA) (Singapore)
John Deepika
Kapil Dev Padukone Sachin Bansal (Flipkart)
Abraham*
(Actor) (Cricketer) (Actor)
Sanjay Nayar & Falguni
Hari Kumar Neelesh Bhatnagar Nayar Family Office
Virat Priyanka (Nykaa founder & KKR MD)
Anushka Chopra (Singapore) (UAE)
Kohli Sharma
(Cricketer) Jonas*
(Actor) (Actor)
Kunal Bahl (Snapdeal)
AR Sonam MS Dhoni
Kapoor Satveer Singh Thakral Aneel Ranadive
Rahman (Cricketer)
(Singer) (Actor) (Singapore) (USA)
Ronnie Screwvala (Upgrad)
Sachin Sukhbir Yuvraj VSS Holdings & VSS Investco
Tendulkar Singh* Singh S. Ramakrishnan Mahendra Vora
(Cricketer) (Singer) (Cricketer) Vijay Shekhar Sharma (Paytm)
(UAE) (USA)
Note(s): * indicates individuals who have made multiple investments in Indian start-ups but do not have a formal Family Office
Source: Primary Research © 256 Network © Praxis Global Alliance | 5
Family Offices with mature portfolios have investments in startups aplenty
Family Offices have been participating in 50+ deals yearly Tech investments made by notable Family Offices in India
# deals participated # invested
Family Office Portfolio companies
2015-20 firms
88
35
74
72
69
67
31
53
30
30
13
2015 2016 2017 2018 2019 2020
Source(s): Company website. PGA Labs deal database, Praxis analysis © 256 Network © Praxis Global Alliance | 6
Early investors in startups have reaped handsome returns
Return multiple
Reliance Industries Market Cap: US$ 177B Valuation: US$30B* Valuation: US$ 15B
Jio Platform valuation: US$ 67B Total funding: US$ 7B Total funding: US$ 3.12B
Total funding: US$ 20B Total investors: 30 Total investors: 43
Jio is currently valued at
almost 38% of RIL
market cap
Apr 22, 2020 US$ 5.7B: Facebook 750x
May 04
16.7x 6.6x 6.9x 5x
US $750M: Silver Lake Direct
investment by a
May 08 US$ 1.51B: Vista Equity Partners 2007 Founded 2011 Founded Family Office
Series A: US$ 9M
May 17 US$ 875M: General Atlantic 2009 Series A: US$ 1M, Accel 2013
Aarin Capital
May 22 US$ 1.5B: KKR Series B: US$ 25M
2010 Series B: Undisclosed, Tiger Global 2015
Sequoia Capital
Jun 05 US$ 604M: Silver Lake Series C: US$ 20M, Tiger Global, Series C,D,E
2011 2016
Kalpan Group investors Sequoia Capital, IFC, Charles Schwab
Jun 05 US$ 1.21B: Mubadala
Series D: US$ 150M, Naspers, Iconiq
2012 Series F: US$ 70.7M
Jun 07 US$ 745M: Abu Dhabi Investment Authority Capital 2017
Tencent, Lightspeed, Verlinvest
2013 Series E: 360M, Tiger Global, Accel,
Jun 13 US$ 850M: L Catteron Naspers Series F,G: 540M
Series F, G, H: US$ 1.9B, Baillie Gifford, 2018
2014 General Atlantic, Naspers
Jun 18 US$ 1.5B: Public Investment Fund Steadview, Greenoaks, GIC, Naspers
Series G: US$ 724M, Qatar
US$ 254M: Intel 2015-16 Series I, Debt, J: US $830M 2019 Investment authority, The Times
Jul 03
Tiger Global, Times Group, Morgan Stanley Group, Tiger Global
Jul 12 US$ 100M: Qualcomm Ventures 2017 Series J, Debt: US $4B Series G, H: US$ 655M
SoftBank, Tencent, Microsoft 2020 DST Capital, Tiger Global, Bond
Jul 15 US$ 4.5B: Google
2018 Acquisition by Walmart: US$ 16B Capital
Note(s): Jio platform valuation taken according to Google’s investment. Industries Market Cap taken as of 25th May 2021 © 256 Network © Praxis Global Alliance | 7
Source(s): Company website, Tracxn, PGA Labs deal database, New Street Research LLC, *Market Estimates
A comprehensive thesis for venture capital investing
A. Tech is eating the world C. Strategic benefits
1 Tech firms dominate equity markets Opportunities for Family Offices to
1 explore core business adjacencies
India’s tech opportunity is in its
2 private markets 2 Access to innovation & deep tech
3 India’s startup ecosystem is booming Access to a digitally empowered
3 workforce
4 Digital-first solutions create deeper
impact for all stakeholders
B. High Returns
Alternatives are the x-factor in
1 portfolio construction D. Atmanirbhar Bharat
2 VC outperforms public markets 1 Retaining tech ROI in India
3 Play at the sweet spot of risk & returns 2 Retaining Indian talent in India
Maturing ecosystem has led to more exit 3 Retaining Indian IP in India
4 avenues and stellar returns
© 256 Network © Praxis Global Alliance | 8
VC-funded technology companies dominate public markets globally
Top 5 global companies by Market Cap
2001
US$ 406B US$ 365B US$ 272B US$ 261B US$ 260B
CAGR 20% CAGR 21% CAGR 17% CAGR 55% CAGR 28%
2011
US$ 406B US$ 376B US$ 277B US$ 237B US$ 228B
CAGR -2% CAGR 39% CAGR 1% CAGR 1% CAGR -2%
2020
US$ 2260 B US$ 1,680 B US$ 1,630 B US$ 1,190 B US$ 778 B
CAGR 31% CAGR 27% CAGR 39% CAGR 19% CAGR 21%
Tech companies Non-tech companies
Note(S): Circle sizes represent the market capitalisation for firms, CAGR is calculated for Market Cap for a 5 year period, (Petrochina: 2008-11) © 256 Network © Praxis Global Alliance | 9
Source(s): Pitchbook, Company websites, Kyofin, Macrotrends, Praxis analysisIndia’s public markets are yet to see participation from its biggest startups
Market-cap of top 15 US tech firms as a % Market-cap of top 15 publicly listed tech firms as % of
of US GDP tripled in the last 5 years India’s GDP has barely moved sideways
Sectoral growth has recently been spurred
The top 15 tech companies in the 47% by the impact of Covid19.
USA grew 6x faster than the overall Several rumored startup IPOs foreseen in
economy in the past five years 2021-22.
31%
24% 23%
18% 12.6%
16%
7.6% 7.8% 7.9%
6.8% 6.9%
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Source(s): Data as of Dec 2020, Pitchbook, Praxis analysis © 256 Network © Praxis Global Alliance | 10With startups going public bigger and later…
US tech IPOs valuation at listing and age at IPO
(2005-2020)
Median valuation at listing (US$ M) Median age at IPO (years) 20
4,319 18
16
14
13 14
12.5
12
11 11 11 11 11 12
10 10
9.5
9 9 9 10
2,175
8
1,928
8
6
1,129
813 824 812 815 841 4
646 686 715
560 548
307 352 2
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Number of US tech IPOs
45 48 76 6 14 33 36 40 45 51 38 21 30 39 37 42
Source(s): Jay Ritter IPO database © 256 Network © Praxis Global Alliance | 11…an investor’s opportunity to ride India’s tech sector growth is
largely in the private space
# Public and private tech companies by
Market cap / Valuation in India
• 250+ Indian startups with valuations
141 over $100M have the potential to go
public in India
• The Indian private tech market is
close to matching the size of its
public tech market
59
46
• Total market cap of public tech
companies as a % of India’s GDP is
16 16 12.6%, while the valuation of private
10
4 3 4 3 1 1 tech companies is 10.2% of GDP
US$ 100- US$ 500M-1B US$ 1-5B US$ 5-10B US$ 10-50B US$ 50-100B More than
500M US$ 100B
# private tech companies # public tech companies
Source(s): Chiratae Ventures, 3one4 Capital © 256 Network © Praxis Global Alliance | 12
Data as of May 25th, 2021Which is why India’s private tech landscape is booming
$70 B $11.4B 55K+ 56 150
Funding into Indian Indian unicorns as of India will likely be
Startup funding in Total # of Startups
startups during 2014 - present, 14 added in home to 150 unicorns
2020 across 792 deals launched in India
2020 2021 already by 2025*
A Robust
ecosystem 135+ 300+ 520+ 47% 3
of enablers
Unique corporates Active institutional Accelerators and Startup unicorns Cities among top
collaborating with investors in 2020 incubators as of have overseas 10 startup cities
startups funded 2020 market in Asia – Pacific,
between 2015-20 2020
Note(s): Data as at Dec 31, 2020, # of unicorns as of May 25th 2021, Active institutional investors à have invested at least once in 2020
Source(s): NASSCOM, Government portals, Inc42, Tracxn, Startupblink, *3one4 Capital © 256 Network © Praxis Global Alliance | 13Allocations in Alternatives (like VCs) generate portfolio outperformance
Typical 7-Year Portfolio Performance: 20% portfolio allocation towards Alternatives (incl. VC) yields 30% of total portfolio returns
Alternatives make ~20% of the portfolio of Indian Family Offices Alternatives contribute to 30% of returns of a typical portfolio
Asset allocation of a typical Family Office (%) 7-year avg return contribution by asset type (%)
Gold 2% 6% CAGR Gold 1%
Debt 13% 6% CAGR Real Estate 6%
Alternatives are the
Real Estate 15% 4.5% CAGR Debt 7% largest contributors
to portfolio
outperformance
Hybrid* 15% 11% CAGR Hybrid* 15%
Alternatives 20% 17% CAGR Alternatives 30%
Equity 35% 13% CAGR Equity 41%
Source(s): Client Associates estimate based on their client portfolio
Hybrid refers to Balanced Funds, which have a blend of public market equity and debt allocations, usually in a 60-40 ratio
© 256 Network © Praxis Global Alliance | 14
Long term return expectations are basis historical asset class returns over a rolling 7 year windowDespite public equities having had an exceptional run...
Index Returns (x) IRR
S&P CNX Nifty 1.67x 8.22%
SMLCAP 2.10x 12.11%
Indian Indices
BSE IT 2.27x 13.47%
BSE TECH 1.87x 10.10%
S&P 500 1.79x 9.41%
NYSE Composite 1.21x 2.91%
Global Indices
Russell 2000 1.28x 3.90%
NASDAQ Composite 2.65x 16.15%
Daily closing prices are considered for a period between Apr 1, 2014 to Sep 30, 2020
Source(s): BSE, Bloomberg, Secondary research © 256 Network © Praxis Global Alliance | 15…top quartile VC Funds in India outperformed* (FY14-20)
Index Returns (x) IRR
Benchmark* 2.06x 11.72%
Cat 1 AIF (INR Funds)
Top Quartile 2.51x 18.19%
Benchmark* 1.66x 8.09%
Cat 1 AIF (USD Funds)
Top Quartile 2.05x 11.68%
Period between Apr 1, 2014 to Sep 30, 2020
“The well performing VC funds beat the public markets consistently over a period of time. The best ones in fact beat the best performing
public market indices and those are the ones where you want to park your capital! ”
- Sudhir Sethi | Chiratae Ventures
*Note(s): Private market pooled IRR’s for Benchmark is available between April 1, 2013 and September 30, 2020 © 256 Network © Praxis Global Alliance | 16
Source(s): CRISILDue to higher risks, private market investments generate higher returns
30 Global private market vs public market returns
2000-2016 is the period
%, 2000-2016 under consideration as
funds with vintage post
25 24 2016 are yet generate or
realise portfolio gains to
be comparable to a
benchmark
20 19
18
17 17 17
16
15
15 14
15 14 14
Avg. return: 13 13 13 13
15% 12 12
11 11 11 11 11 11
10
10 9
7 8
Avg. return: 7 7 7
10% 6 6 6
5
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
S&P 500 MPME IRR Private markets Average returns for Average returns for
private markets public markets
Note(s): Data as of June 2020. Pooled returns used to calculate IRRs for private markets, mPME or modified public market equivalent used for public markets.
Source(s): Cambridge Associates LLP, UBS Family Office report 2019, Praxis analysis © 256 Network © Praxis Global Alliance | 17Investing in Venture Capital allows Family Offices to balance risk & return
Direct Investment VC Funds PE Funds Public Markets
• High return on successes • High returns on successes • Stable returns through • Public markets tend to have
• No capital protection in the • Seasoned teams improve investments at a more lower returns than private
event of failure access to and success of mature stage markets
Returns investment picks • Seasoned teams improve
access to and success of
investment picks
• High risk due to absence of • Risk lowered through pooled • Risk lowered through pooled • Market volatility impacts all
pooled capital capital capital listed companies irrespective
• Low probability of success • Strategic capital allocation & • Lower chances of failure at of performance
Risks typically means only 1-2 out staggered deployment the late stage
of 10 investments succeed • Delinked from public market • Delinked from public market
volatility volatility
• Low ticket size in early stage • Multiple opportunities for • High ticket size investments • High flexibility in amount
investments investments at different • Relatively few PE investment invested
• Avoidable: Cost of cheque sizes – seed, early, opportunities in India • Transparent costs
Cost management team to scout, growth, late stage
• Fund managers charge fees
vet, and invest in the right • Fund managers charge fees and a carry on profits
companies and a carry on profits
Unfavorable Favorable
© 256 Network © Praxis Global Alliance | 18Opportunities for Family Offices to explore core business adjacencies
As Hero Motocorp ramps up its
efforts in the EV segment, a stake
in Ather energy provides access to
technology for the company to
improve its offerings
EV Segment
As co-living spaces gain
traction among millennials, Icertis – a digitizing solution for
partnering with these Digital contract management is used
Co-living space
services will enable Lodha transformation by Wipro group to streamline
group to increase the yields internal processes
on real estate projects
As E-pharmacies become As personal care purchases
popular, Manipal group can become increasingly digital,
E-pharmacy E-commerce for Marico can leverage its
leverage partnership with
PharmEasy for expanding its
personal care partnership with Nykaa to
pharmacy sales serve customers who shop
online
Shared mobility
As vehicle ownership rates plummet and
shared mobility gains traction, Mahindra
group can leverage its partnership with
Zoomcar to expand into B2B sales
Source(s): Secondary Research © 256 Network © Praxis Global Alliance | 19Atmanirbhar Bharat opportunity: Retaining tech ROI in India
Indians have emerged as the intellectual powerhouse of the world, with 30% of the Fortune 500 companies having Indian CEOs and a third of all
new founders in Silicon Valley being Indian or of Indian origin. But the intellectual capital of India is underserved by its economic capital as Indian
investors shy away from Indian startups. Yet India has emerged as the third largest startup ecosystem in the world in terms of startups, funding
and exits, behind only the US and China – despite the lack of domestic capital participation. India’s rise to become a startup and digital
powerhouse is not a possibility, but an inevitability. The only question that remains is the role that Indian capital will play in this once-in-a-lifetime
revolution.
India’s domestic investment contribution to start-ups is 26% Global funds have major stakes in Indian start-ups
Fund Country Stakes in Indian unicorns
Domestic investment in startups as a ratio of total funding
(in %, 2019) • 12.4% in Byju’s
• 8.3% in OYO
• 6.9% in Zomato
India 26% • 48% in OYO
• 33.5% in Snapdeal
Singapore 26% • 19.6% in Paytm
South Korea 30% • 11.6% in Ola
• 5.4% in Zomato
Australia 49% • 1.3% in Byju’s
• 9.1% in Ola
China 57% • 5.6% in Swiggy
Japan 84% • 29.3% in BigBasket
• 3% in Snapdeal
Source(s): Tracxn, Preqin database, Secondary research, Praxis analysis © 256 Network © Praxis Global Alliance | 20Atmanirbhar Bharat opportunity: Retaining Indian talent in India
4.2M 67 1.4B 56
US Unicorns with Unicorns in
Indians in Population of
Indian-origin India*
USA India
founders*
Notable US startups with Indian origin founders
© 256 Network © Praxis Global Alliance | 21
Source(s): 3one4 Capital *Data as of May 25 2021 (includes Unicorns that got listed in the public markets)
thAtmanirbhar Bharat opportunity: Retaining Indian IP in India
There are two factors that will result in Indian IP being retained in India – the first is corporates and government encouraging procurement from
local start-ups and paying a fair price for their IP, and the second is having Indian investors fund these start-ups. Although there is a lot to be
done, I see positive trends on both fronts. Companies domiciled in India with significant IP in our portfolio such as Delhivery, Pando, Sedemac,
and Unacademy have benefited from these trends. Public listing of some of the late stage start-ups on the Indian markets in 2021/22 will provide
a big impetus as well.
Indian startups incorporated outside India Indian IP filed in other countries
Patents filed by India domiciled
1,338 companies in the US in 2018-19
US Singapore Singapore
Patents filed by Inmobi in
29 Singapore
Singapore Singapore Singapore
Patents filed by Affle India in
14 Singapore and USA
Singapore Singapore Singapore
Source(s): Secondary research, Praxis analysis
analysis, Data as of Dec 2020 © 256 Network © Praxis Global Alliance | 22Tech enabled businesses outperformed traditional businesses
1 2 3
E-grocery OTT Edtech
platforms platforms platforms
Gained traction as social distancing requirements Large and growing internet population in Tier-II and Increased engagement as students become
made shopping from stores difficult smaller cities consuming vernacular content comfortable with online learning as traditional
options become unavailable
84% growth in customer base 16M people created accounts in 30% Increase in time spent on
during COVID times Q1 2020 - almost double the new EdTech apps in Q2 2020
signups seen in Q4 2019
Retention rates of 50% against Average time spent on BYJU’S
30-45% earlier platform increased from 70 to 91
mins during Covid
INR 7,000 Cr loss of revenue INR 184 Cr loss of revenue in Q2 2000 students were staying in
during COVID leading to sale of 2020 against 48 Cr profit in same Kota for offline coaching during
business to Reliance quarter last year covid; pre-covid this number ran
in few lakhs
Source(s): Secondary research, Praxis analysis © 256 Network © Praxis Global Alliance | 23Biggest winners: EdTech, Online Gaming, E-Groceries, and Health-Tech
• Insurtech
• E-groceries • EdTech
CAGR: >30% • Digital payments
• HealthTech • Online gaming
• Digital lending
Projected growth rate (FY 20-25)
• Ecommerce
• Digital media
• FoodTech • Internet first brands
CAGR: 12-30% • Online classifieds & rentals
• Real estate tech • Beauty & personal care
• AgriTech
• Home services
• Online dating and matrimony
• F&B services
CAGR: 0-12% • Hospitality, travel and tourism • Shared mobility
• Apparel and footwear
• Entertainment
Long Mid Short
Path to profitability
Source(s): Praxis analysis © 256 Network © Praxis Global Alliance | 24VC Funds raised during periods of economic crises have higher returns
Net IRR to LPs by vintage year
%, 1995 - 2016
2000-2016 is the period
Dot com Global under consideration as
crisis Financial funds with vintage post
Crisis 2016 are yet generate or
24.0 realise portfolio gains to
be comparable to a
21.0 benchmark
Avg. 18.5 19.1
return: 17.1 17.2 17.0
16.5
18.30% 15.3
15.1 14.6 14.1
14.0
Avg. 13.0 12.9
return: 11.2 10.9 10.9
13.45% 9.3
8.6
7.4 7.6
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note(s): IRRs are net of fees, expenses and carried interest, Pooled IRRs have been calculated based on data compiled from 2,024 private equity funds, including fully
liquidated partnerships, formed between 1994 and 2016; funds post 2016 have largely not generated exits yet and hence have not been included. Data as of 30 June 2020.
Source(s): Cambridge Associates © 256 Network © Praxis Global Alliance | 25Tech giants were born during economic downturns
India based start-ups born during the Global Financial Crisis US based start-ups born during the Global Financial Crisis
Start-up Founded Valuation Investors Returns Start-up Founded Valuation Investors Returns
• Infoedge is
• Founder
expected to
Collective
gain
made US$
2008 ~US$ 4B significantly in 2009 US$ 67B
300M of a
case of an IPO
US$ 100K
(expected in
investment
2021)
• Intel capital
• Accel’s ~24%
made 2.93X
stake is worth
returns
~US$ 24B US$ 4.6B with
2008 US$ 950M (invested in 2009
(Market cap.) only a US$
2012, 2013
1.5M
and exited in
investment
2020)
• Sequoia
Capital made
US$ 550M • Matrix US$ 100 B a 18.5x return
2008 (Market partners made 2008 (post IPO on its Series
cap.) 30X returns Market cap.) A investment
post Airbnb’s
IPO
Source(s): Tracxn, Secondary research, Praxis analysis © 256 Network © Praxis Global Alliance | 26The professional breadth of knowledge and skills of Venture Capital teams
Deal flow access
Deal Sourcing Deal selection and closure
• Cultivating rich networks • Art and science of selection
• Keeping ears to the ground • Selecting the optimal capital structure
Portfolio Value Creation
Exit Management
• Being a resourceful mentor
• Exit Planning
• Setting clear goals and incentives
• Risk mitigation
Expediting & capturing value growth
© 256 Network © Praxis Global Alliance | 27Cheat-sheet for selecting the right Venture Capital fund
Selecting the right fund manager
Investment strategy and funding
Team skill and reputation Past track record of superior returns
capability
Talk to references Understand the science IRRs / TVPI generated
1 GP skill sets can be evaluated 5 Understand how the firms operate at 9 Comparison of returns across GPs
through conversations with LPs an intuitive level and consistency of returns
Check for attrition
High attrition or poor succession Check for consistency Follow up rounds
2 planning indicate weak GP team
6 How consistently do funds follow 10 How many rounds of investment? If
dynamics their investment strategy? Any repeat LPs were there
Fund size First time funds
Other limited partners First time funds require a greater
3 7 Bigger funds get access to better 11
A reputed LP trusting the fund is a due diligence to invest in, having
deal flows and bigger equity stakes
good indication of the GP skills had no track record in the past
in portfolio investments
Team backgrounds
Capability to close the round Portfolio firms
4 Past experiences of team members 8 12
Inability to close has an opportunity Past investment decisions – analysis,
with their synergies are a huge
cost capacity and upticks
contributor to returns
Source(s): Excerpts from several closed-door gatherings by 256 Network for Family Offices in India (2020-21) © 256 Network © Praxis Global Alliance | 28MEMBER CONTRIBUTORS Prashanth Prakash Partner | Accel Partners TV Mohandas Pai Chairman | Aarin Capital Rajan Navani VC & MD | Jetline Group of Companies Gaurav Burman Director | Dabur International Sudhir Sethi Chairman | Chiratae Ventures Alagappan Murugappan MD | Stratford House Advisors Shiv Vikram Khemka Vice Chairman | Sun Group Anjali Bansal Founder | Avaana Capital Gopal Srinivasan Chairman | TVS Capital Funds Siddarth Pai Founding Partner | 3one4 Capital GV Ravishankar Managing Director | Sequoia Capital Abhas Gupta Vice President | Burman Family Holdings Sandeep Singhal MD | Nexus Venture Partners Nitai Utkarsh Lead, Investment Strategy | Hero MotoCorp Ltd. Rishabh Mariwala Director | Sharrp Ventures Anand Lunia Founding Partner | India Quotient Chirantan Patnaik Director, Venture Capital | CDC Group Gaurav Sachdeva Managing Partner | JSW Ventures Pranav Pai Founding Partner | 3one4 Capital Anirudh Damani Managing Partner | Artha India Ventures Ikram Jaffer Private Equity | Premji Invest Vinod Abrol Head, Private Investment | SAR Family Office Dr. Srikanth Sundararajan Partner | Ventureast Chetan Mehta CIO | Transworld Global Soumya Rajan Founder & CEO | Waterfield Advisors Shailesh Jha VP, Corporate Finance | SUN Group Nikhil Gupta Practice Head | Client Associates Alok Soni Co-Founder | Khyaal Satveer Singh Thakral CEO | SGAN Arnav Sahni Vice Chairman’s Office | SUN Group Munish Randev Founder | Cervin Family Office Saketh Katikaneni Analyst | Chiratae Ventures
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