A look at 10 Indian start-ups that hit the markeither with massive funding rounds (Flipkart, Paytm) or profitable acquisitions by larger start-ups (TaxiForSure, Myntra, redBus)
Founders: Sachin Bansal and Binny Bansal
Investors: Tiger Global Management, Accel Partners, Naspers, DST Global, Microsoft, Tencent and eBay, among others
Funds raised: More than $4.5 billion
Sale price: Partial exits to Accel Partners, Helion Venture Partners, IDG Ventures, founders and tens of employees
Flipkart, the country’s most storied consumer Internet firm, today commands a valuation of $11.6 billion. In July 2015, when its valuation had peaked at $15 billion, a few investors sold some of their shares to other investors at handsome profits. Flipkart is preparing the ground for a partial exit to its biggest investor Tiger Global Management, which is likely to sell a part of its holding to Japanese investor SoftBank. Over the years, founders Sachin Bansal and Binny Bansal along with early employees have also sold some of their shares. The real challenge for Flipkart will be to deliver exits to all of its investors by going public at some point.
Founder: Vijay Shekhar Sharma
Investors: SoftBank Group Corp., SAIF Partners, Alibaba, Ant Financial Services and MediaTek, among others
Funds raised: About $2.5 billion
Sale price: Exits to Reliance Capital, SAIF Partners, SAP Ventures, Saama Capital
India’s second most-valuable start-up at $7 billion, Paytm has worked wonders for early backers Reliance Capital, SAP Ventures, Saama Capital, SAIF Partners, and scores of employees. In March, the three sold their combined stake of about 4.3% to Alibaba Group Holdings Ltd and its arm Ant Financial, which valued Paytm at $5.7-5.9 billion. Reliance Capital took home about $41 million for its investment of about $2 million in 2010, while SAP Ventures and Saama recorded 50x returns. The company’s latest funding, a $1.4 billion round from SoftBank, includes a $400 million partial exit for SAIF Partners, which first backed Paytm in 2008. A steady surge in valuation helped employees and founder Vijay Shekhar Sharma make fortunes to the tune of at least Rs600 crore.
Founders: Mukesh Bansal, Ashutosh Lawania, Vineet Saxena and Raveen Sastry
Investors: IDG Ventures, Kalaari Capital, Accel Partners, Premji Invest and Tiger Global Management
Funds raised: About $130 million
Sale price: $330 million, sold to Flipkart in May 2014
Until Snapdeal bought FreeCharge a year later, Myntra’s sale to Flipkart for $330 million was the largest acquisition in the domestic consumer Internet landscape. It is believed to have been orchestrated by common investors Accel Partners and Tiger Global Management, and paved the way for several investors such as Kalaari Capital and IDG Ventures to enter Flipkart. Needless to say, Myntra’s founders including Mukesh Bansal and Ashutosh Lawania made windfall gains through the sale. Interestingly, unlike a few big consumer Internet mergers and acquisitions that did not augur well for the acquired companies—cases in point being TaxiForSure and Freecharge—Myntra has emerged as a key growth driver for Flipkart and is now the largest online fashion store in the country.
Founders: Phanindra Sama, Charan Padmaraju and Sudhakar Pasupunuri
Investors: Helion Venture Partners, Inventus Capital Partners and SeedFund
Funds raised: $10 million
Sale price: $135 million, sold to Ibibo Group in June 2013
redBus.in caught the eye of Chinese Internet leader Tencent and South Africa’s media firm Naspers when its revolutionary online bus ticketing platform had gained a monopolistic position, selling about a million tickets a month. The company had cracked bus bookings, the dominant travel category in India—a country with the maximum percentage of feature phones. The bet was a no-brainer for Tencent and Naspers, which were looking to strengthen their local travel business Ibibo. In early 2013, Ibibo Group made the offer to buy the entire company, at a time when redBus was in the market looking to raise Series D funds. The founders grabbed the deal. While the terms of the takeover remain undisclosed, founders Phanindra Sama and Charan Padmaraju (who held about 20% in redBus) and backers Helion, Inventus and SeedFund are believed to have reaped handsome returns.
SVG MEDIA (2006)
Founders: Manish Vij and Harish Bahl
Investors: Xplorer Capital
Funds raised: $3.5 million
Sale price: $110 million, sold to Dentsu Aegis Network in April 2017
Manish Vij, before SVG Media, had already successfully sold two start-ups: Quasar Media to WPP Digital in 2007 and electronics online retailer Letsbuy to Flipkart in 2012. Vij, along with Harish Bahl, then went on build a media and marketing group. Between 2010 and 2015, SVG acquired majority stakes in Komli, DGM and SeventyNine, giving it a presence across online, video and affiliate marketing. In April, the founders sold the bundle to global marketing leader Dentsu Aegis for an estimated $110 million. Vij and Bahl, which owned 50-60% in the group, reaped handsome returns.
CITRUS PAY (2011)
Founders: Amrish Rau, Jitendra Gupta and Satyen V. Kothari
Investors: Sequoia Capital, Ascent Capital, Beenos Asia and E-context Asia
Funds raised: $32.5 million
Sale price: $130 million, sold to PayU Global in all-cash deal in September 2016
Payments gateway and wallets firm Citrus Pay grew fast and grew well. In about two years, it had 100 employees processing four million transactions every month. At the same time, Naspers-backed PayU Payments Pvt. Ltd (launched in the same year as Citrus) was strengthening its hold. Naspers saw Citrus, with its 30 million customer-base, as a good opportunity for inorganic expansion Early investors Ascent Capital, Beenos and Sequoia are said to have received attractive exits, while co-founder Amrish Rau was made the CEO of the merged unit.
Founders: Aprameya Radhakrishna and Raghunandan G.
Sale price: $200 million, sold to Ola in March 2015
TaxiForSure is one of those start-ups which found itself mauled by deep-pocketed rivals, got starved of cash and sold itself to larger rival. The company, which raised a mere $26 million to fight off SoftBank-backed Ola and Uber, the world’s most valuable start-up, was sold to Ola for $200 million, with founders Aprameya Radhakrishna and Raghunandan G. making about Rs120 crore each, according to media reports. TaxiForSure investors Accel Partners, Bessemer Venture Partners, Blume Ventures and Helion Venture Partners got shares in Ola. Ola, however, shut TaxiForSure in August last year.
Founders: Valerie Wagoner, Amiya Pathak and Sanjay Swamy
Investors: Times Internet, Mumbai Angels, Jungle Ventures and 500 Startups
Funds raised: Rs3.5 crore in seed round; undisclosed Series A and B
Sale price: Sold to Twitter Inc. for $35 million in January 2015
The San Francisco, US-based social media giant was looking to start operations out of India and found this unique start-up offering “missed-call" marketing to brands and businesses. Indians have, traditionally, been miserly spenders when it comes to telecom services, and ZipDial’s service—which allowed firms to reach out to potential customers who gave a missed call—was an instant success. In 2014, Twitter offered ZipDial the deal that would see co-founders Valerie Wagoner and Amiya Pathak join Twitter.
Founders: Naveen Surya and Ashok Kumar Goyal
Investors: Matrix Partners, Intel Capital and Lightspeed Venture Partners
Funds raised: $35.3 million
Sale price: Ebix Inc. bought 80% in ItzCash for Rs800 crore ($124 million) in May 2017
ItzCash started with prepaid payment cards in 2006 and later diversified into a host of payment services such as cash management and payments gateway. When digital transactions surged towards the end of 2016 following demonetisation, India’s fintech sector attracted interest from a number of global investors. Ebix, a software firm with presence in 40 nations, was also scouting for bets in local payments space. In 2017, it acquired 80% in ItzCash, which was processing Rs14,000 crore worth of transactions annually, in a deal that gave investors Matrix Partners, Intel Capital and Lightspeed a complete exit.
Founders: Kunal Shah and Sandeep Tandon
Investors: Sequoia Capital, Sofina, ru-Net, Valiant Capital Partners and Tybourne Capital.
Funds raised: $120 million.
Sale price: $400 million, sold to Snapdeal in April 2015.
Digital payments platform Freecharge is the only start-up in this list that appears on both the success and failure lists. Launched as a mobile recharge service, the company became popular with customers because of its sleek product. It hit a high in early 2015 when it was bought by Snapdeal in the largest consumer Internet deal so far. Snapdeal snapped the start-ups for an estimated $400 million (and has infused roughly $65 million since). Freecharge was to fight Paytm, while parent Snapdeal had locked horns with Flipkart. Paytm simply outspent Freecharge, venturing into everything from utility bill payments and retail to movie, bus and air ticket sales, and now a payments bank. The company was starved of cash partly because of a boardroom battle at its parent Snapdeal. Freecharge is now in talks to sell at a price of just $45-70 million, a fraction of the $400 million paid by Snapdeal just two years ago.
(*Sale still hasn’t been completed.)
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