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In a move that underscores the potential of India's burgeoning fintech sector, early-stage VC firm 8i Ventures has announced a complete exit from M2P Fintech, a leading API infrastructure company.
What does this golden exit mean? And why investors' prefer to exit from startups after making profits? Let's find out with TICE.
8i Ventures' Gold Exit from M2P
8i Ventures' journey with M2P Fintech began in January 2020 with an initial investment of INR 9.7 crore.
"We invested 9.7 Cr in this company starting from Jan 2020, which was our first check," says Vikram Chachra, founding partner of 8i Ventures.
"And we invested in Series A as well as B. We've exited for a total amount of INR 115.9 Cr, are booking and MOIC (Multiple on Invested Capital) of 12X and an IRR of 131% over four and a half years.”
A Strategic Exit and a Glimpse into the Future
This lucrative exit aligns perfectly with 8i Ventures' strategy of returning capital to investors and reinvesting in promising early-stage companies. "Every fund is like a basket of future winners," explains Chachra. "When you can use a minimum amount of capital and return the cost of that basket, you should do it, because then the rest of the basket becomes free.”
8i Ventures' Fund I, launched in May 2019 and closed in July 2021, has already seen its value increase by 2.5 times its initial investment.
M2P Fintech
Founded in 2014 by Madhusudanan R, Muthukumar A, and Prabhu R, M2P Fintech has emerged as a key player in the API infrastructure space.
Recently, M2P Fintech raised INR 850 Cr in a Series D round led by Helios Investment Partners, catapulting the company's valuation to an impressive INR 6,500 Cr.
A Trendsetting Exit in India's Startup Ecosystem
8i Ventures' successful exit from M2P Fintech is not an isolated incident but rather a reflection of a broader trend within India's dynamic startup ecosystem. This trend, particularly pronounced in the fintech sector, signals a maturing market where early investors are beginning to reap substantial rewards from their strategic bets.
Recent High-Profile Exits Underscore the Trend:
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Zodius Capital and OfBusiness: Just last month, Zodius Capital made a noteworthy exit from OfBusiness, a B2B commerce platform for raw materials. This exit generated over $100 million in returns on an initial investment of $8 million, demonstrating the immense potential for value creation in this sector.
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SoftBank and PolicyBazaar: Earlier this year, SoftBank, a global investment giant, made headlines with its successful exit from PolicyBazaar's parent company. This strategic move yielded a staggering $650 million return, further solidifying the attractiveness of India's fintech landscape for investors.
Factors Driving This Exit Trend
Several factors are contributing to this wave of successful exits in the Indian startup ecosystem:
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Maturing Startup Landscape: Many Indian startups, particularly in the fintech sector, are reaching a stage of maturity where they are attractive acquisition targets or are ready for public listing. This maturity is driven by factors such as strong revenue growth, established market presence, and robust business models.
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Increased Investor Confidence: The success stories of early investors are instilling greater confidence in the Indian startup ecosystem. This increased confidence is attracting more capital, further fueling growth and creating more opportunities for lucrative exits.
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Favorable Regulatory Environment: The Indian government has been proactive in creating a supportive regulatory environment for startups. Initiatives such as tax benefits, simplified compliance procedures, and dedicated funding programs are encouraging innovation and attracting investment.
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Growing Domestic Market: India's vast and rapidly growing domestic market provides a fertile ground for startups to scale their operations and achieve significant valuations. This large addressable market is a key factor attracting both domestic and international investors.
Implications for the Future
This trend of successful exits is a positive sign for the Indian startup ecosystem. It not only generates significant returns for investors but also encourages further investment, fosters innovation, and creates a virtuous cycle of growth. As the Indian startup ecosystem continues to evolve, we can expect to see more such high-profile exits in the future, further solidifying India's position as a global hub for innovation and entrepreneurship.
8i Ventures: Focused on the Future
With a portfolio that includes high-potential startups like slice, Blue Tokai, Easebuzz, and Bbetter, 8i Ventures is well-positioned for continued success.
"We felt that we could let one go, which has done its job," says Chachra, reflecting on the decision to exit M2P Fintech. "It had reached a point of returning the fund and some.”
Looking ahead, 8i Ventures plans to concentrate on its second fund of $50 Mn and the Origami program, with a keen focus on investments in the fintech and e-commerce sectors.