Chiratae Sells Stakes In Multiple Portfolio Startups To Madison India For $70 Mn

Early stage investor Chiratae Ventures, which had backed startups like  Lenskart, EatFit, Cult.fit and FirstCry among others, has reportedly sold stake in some of its portfolio companies to private equity firm Madison India Capital for $70 Mn.

Chiratae sold its stake in companies, including Lenskart, Bizongo and Rentomojo, which it had invested from Fund II and III, ET reported, quoting sources that “it was a bulk secondary deal”.

“The transaction was completed a few months ago after Chiratae decided to offload shares in some of its companies. The $70-Mn cash exit will be an overall good return for them, as the two funds (Fund II and III) were small in size,” the report said.

Queries sent to Chiratae Ventures did not elicit any response till filing of this report.

This comes at a time when VCs in India have been struggling to gain an equitable return on their investments in startups. After jumping on the startup bandwagon earlier, the VC ecosystem has been dealing with slow returns on investments in the past year. This resulted in more VCs taking a prudent approach in their investment strategy. 

Further, more investors are eyeing secondary sales to make partial exits from their portfolios. Most recently, investors of ecommerce unicorn Meesho were in discussions with potential investors to divest their stake. 

In September, US-based investors of Eruditus were seeking an exit from the startup in its $150 Mn fund raise bid. 

For Chiratae, this isn’t the first instance where the VC divested from a startup in a secondary transaction. 

Earlier in 2022, the VC made a majority exit from Lenskart when it participated in the eyewear unicorn’s $400 Mn funding round led by Abu Dhabi Investment Authority (ADIA).

On the other hand, this will be the second time when Madison India Capital will be adding startups to its portfolio via secondary stake transactions. In 2017, the company bought eight portfolio companies from Peak XV (erstwhile Sequoia Capital) for $180 Mn.

Madison Capital is backed by Lexington Partners, an LP which specialises in secondary transactions. It counts companies like Pine Labs, Gupshup and CarDekho in its portfolio. The VC firm has already included Chiratae Ventures backed startups like Lenskart, Rentomojo, and Bizongo, in its portfolio.