ESV Update 2024

By Abhishek Sanghvi   |   Reading Time – 9 mins

‘Continued Success. New Learnings & Capabiliites’.

Here’s an update on what’s kept us busy during the year, how we’ve fared, and what’s our plan for 2025.

(Long Post)

Highlights of the year:

• Made 3 new investments only: one in a sports-tech venture, a second one in a pre-IPO round of our B2B school-tech company, third in a social-impact ed-tech venture
• Made multiple partial-exits – with 40%+ IRR in all;
• Developed new capabilities in SME IPO and M&A

Special mention upfront for the sports-tech venture where we invested in Nov; already doing ~24 Cr.+ ARR managing 21 sports centers in Bangalore. This was also the first deal in which we were able to get the legendary cricketer Zaheer Khan to join our investment round.

Some specific updates on our Portfolio, focused more on revenue growth / P&L than just valuations:

(All revenues are taken from quarter ending Dec ’24; comparison is from last year with some approximations)

A. Logistics-tech venture grew from ~₹28 Cr. ARR to ~₹40 Cr. ARR with a target to double revenues in the next 12 months. The company consolidated its last-mile distribution optimization modules with mid-mile / long-haul to create a completely integrated Transportation Management System (TMS) – the only one in India with extensive predictive analytics capabilities for planning (optimization modules) in addition to standard digitization modules offered by others. It further rolled out India’s most advanced Warehouse Management System (WMS) – first in the country to integrate both to offer exceptional end-to-end capabilities. We also kicked-off prep for a $3M raise (though the company is cash-positive – so it’s largely buffer money)

B. B2B school focused ed-tech venture grew 2x in rev to ₹60 Cr. ARR without any capital infusion, with positive PAT. We decided to put this venture on track for a public listing, and infused an additional 6 Cr. to target 100 Cr. sales / 10 Cr. PAT to start the SME IPO process. We also got a public market expert to invest in personal capacity.

C. Our health-tech venture continued to win some govt contracts; This was the first diagnostic company in India to get ICMR approval for multiple-testing using a single dry sample, and become a vendor of choice for mass-scale testing at low price-points. Though we had already taken 80%+ exit in this venture in 2023 & 2024, we’re happy to see the continued growth of the company.

D. Another ed-tech company went through a turbulent time restructuring its sales & ops to ensure profitability; the company will close the FY at 25 Cr.+, and should be back on track for profitable growth. We put our finstack team to help initiate a detailed financial plan for next year.

E. Analytics-SaaS company has continued to build & grow its retail IQ stack, and is holding its revenue steady at ~$1M ARR

F. Our fin-tech venture witnessed several challenges owing to major structural changes in the consumer finance landscape (credit cards, personal loans etc.). The company launched its consumer co-branded product vertical, scaling its secured card product, building on its distribution capabilities. Revenues remained flat at ~₹80 Cr. ARR.

G. India’s popular healthy FMCG brand (including keto products) grew 100%+, reaching an ARR of ₹50 Cr driven by new products and category leadership in Q-commerce. It also got an overwhelming response to its pre-Series A fund-raise, raising ₹20 Cr. against the initial plan of ₹10 Cr. The venture continues to add new products, enhance production capacity and expand their cloud kitchens.

H. Our investment in a career counseling SaaS venture remained flat at ~₹10 Cr., with focus shifting from new investments in tech/product/sales toward ensuring profitability & sustainability.

I. Our fashion-tech venture has strategically reconfigured its business model to prioritize growth on online marketplaces, ensuring a more profitable scale. While they have reduced their dependency on offline retail stores—particularly those located at highway way-side amenities impacted by ongoing road construction—their revenue for CY 2024 is projected to be around ₹17 Cr, with a significant milestone of turning EBITDA positive.

J. Next-gen executive education venture achieved a consistent growth reaching an ARR of ~₹50 Cr. at positive EBITDA without any capital-raise. Additionally, the venture started multiple programs with Oxford and CMU, and launched new programs in Saudi Arabia and UK. The company has also expanded its leadership team by bring onboard CTO & CBO. The company is getting ready to do launch an IPO in the next 12 months, with a pre-IPO round planned shortly.

K. Logistics venture specializing in tracking goods-carriers at scale, focused on product restructuring and new geographies/use cases, retaining its ARR of ₹20 Cr.

L. India’s largest OTT platform for local dialects achieved a 40% revenue growth, with current ARR of ₹180Cr – a 7x+ growth from last year. One of the largest success stories in India.

M. The revenue of India’s leading society management platform grew by 25%, reaching ARR of ₹15 Cr.; the company is working hard to deliver operational profitability and raise another round at 25% premium to the last round.

N. Our last ed-tech venture that had to completely reinvent itself the year before; battling extremely harsh business & funding situation, it continued to scale in a new form, raise capital at regular intervals at higher valuations, and started acquiring other businesses at very attractive valuations. The company has line-of-sight to ARR of ₹100 Cr. by 2026, planning an IPO as an exit event by that time.

O. Our smallest investment till date was an AI-driven RPA platform offered to enterprises as a SaaS product, with significant tech-IP. This company decided to suspend operations owing to inability to scale sales. In Sep/Oct 2024, we spent significant effort to reach out to 400+ companies for exploring potential acquisition, and conducted 15+ parallel conversations for the same, getting final interest from 3 companies. The IP sale should cover our investments.

P. Our last B2B2C investment in a fashion-tech venture did very well, increasing their ARR by ~50% to ₹15 Cr. The company is expected to get three top-tier celebrities to be investing at a valuation that’s 2.5x of our valuation last year.

Key learnings / what could we have done differently:

• Have an open mind towards emerging trends like SME IPOs. We continued to ignore IPOs as a potential exit for the longest time, only recognizing the importance of this channel towards the last quarter.
• We were on the verge of investing in India’s category leader in a specialized sub-segment of solar industry doing ~30 Cr. in rev; the deal couldn’t conclude as the market stagnated a little bit and we couldn’t agree on some investor-protection terms. This took us 3-4 months of significant effort; we can perhaps be more assertive in discussing all critical issues upfront.

Capabilities we’ve added during the year:

This year we’ve focused significantly on building core capabilities that will solidify our exit strategies for various portfolio companies; while we continue to work with external partners on this front, we believe having these capabilities within control will ensure expected outcomes:

• IPOs (SME and/or main board) : Public markets in India have been performing excepionally well, and SME IPOs have suddenly scaled faster than any of us expected; though there’s a lot of froth in the system, we do believe IPOs will now be a great exit option for many startups, specially for us – since we only invest in companies that are operationally profitable, and are closer to meeting IPO norms. To this end, we started working extensively with merchant bankers and anchor investors to start paving the way for IPOs.
• Mergers & Acquisitions : We’ve always been very good at M&A given the background of all the Partners. We’ve now put a dedicated team for running M&A deals, and initiated 3 mandates on this front
• Building consumer brands as a category : Our traditional strength has been in B2B, however given our success in the two D2C brands we invested in, and continuous flow of excellent deals, we’ve now onboarded a senior Consulting Partner to lead projects / investments in consumer brands, and hope to do much more work on this front in the future

So what’s next for 2025?

We start by welcoming two senior Consulting Partners onboard : Aditya Jadhav (CFA, Mumbai) and Ganesh Balakrishna (IITB, IIMB, Bangalore) – both with significant experience as investors, bankers, consultants and entrepreneurs.

With 4+ years of continuous validation of our investment thesis, we intend to double-down on our low-risk startup investment thesis:

• Invest in post-seed / post-PMF and pre-Series A, where we find the best risk-reward situation for ourselves
• Explore M&A to structure roll-ups for our portfolio companies by acquiring smaller companies, or as an exit for us
• Setup companies for IPOs wherever viable
• Extend our ecosystem to a larger startup audience; go beyond the current word-of-mouth that brings us the best founders/opportunities.

Have more people join the ecosystem – either as investors, founders, mentors, partners or well-wishers. Send us a hi if you feel enthused by what we do.

Looking forward to exciting times ahead.