In a move that highlights the potential of India’s booming fintech sector, an early-stage venture capital firm 8i Companies announced a full release of M2P financial technologya leading company in the field of API infrastructures.
What does this golden exit mean? And why do investors prefer to exit startups after making profits? Let’s find out with ICT.
8i Ventures Gold Release of M2P
8i Companies‘ travel with M2P financial technology started in January 2020 with an initial investment of INR 9.7 crores.
“We invested 9.7 Cr in this company from January 2020, which was our first check,” says Vikram Chachra, Founding Partner, 8i Ventures.
“And we have invested in Series A as well as B. We have exited for a total amount of INR 115.9 Cr, we have a booking and a MOIC (Multiple on Invested Capital) of 12X and an IRR of 131% on four and a half years.
A strategic exit and a glimpse of the future
This lucrative exit aligns perfectly with 8i Ventures’ strategy of returning capital to investors and reinvesting in promising early-stage companies. “Each fund is like a basket of future winners,” says Chachra. “When you can use a minimum amount of capital and pay off the cost of that basket, you should do that, 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 financial technology
Founded in 2014 by Madhusudanan R, Muthukumar A and Prabhu R, M2P Fintech has become 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 groundbreaking exit into India’s startup ecosystem
8i Ventures’ successful exit from M2P Fintech is not an isolated incident but rather a reflection of a larger trend within India’s vibrant 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 departures highlight the trend:
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Zodius Capital and OfBusiness: Last month, Zodius Capital completed a notable exit from OfBusiness, a B2B commodities trading platform. This exit generated over $100 million in return on an initial investment of $8 million, demonstrating the immense value creation potential of 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 generated a staggering return of $650 million, thereby strengthening the attractiveness of the Indian fintech landscape for investors.
Factors Driving This Exit Trend
Several factors contribute to this wave of successful exits in the Indian startup ecosystem:
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Mature startup landscape: Many Indian startups, particularly in the fintech sector, are reaching a stage of maturity where they are attractive acquisition targets or ready to list on stock exchanges. 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 successes of early investors are sparking greater confidence in the Indian startup ecosystem. This increased confidence attracts more capital, fueling more growth and creating more opportunities for lucrative exits.
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Favorable regulatory environment: The Indian government has been proactive in creating a favorable regulatory environment for startups. Initiatives such as tax benefits, simplified compliance procedures and dedicated financing programs encourage innovation and attract investment.
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Growing domestic market: India’s large and rapidly growing domestic market provides fertile ground for startups to expand their operations and achieve significant valuations. This large potential market is a key factor in attracting national and international investors.
Implications for the future
This trend of successful exits is a positive sign for the Indian startup ecosystem. This 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 exits in the future, strengthening India’s position as a global innovation hub and of entrepreneurship.
8i Ventures: focused on the future
With a portfolio including high-potential startups like slice, Blue Tokai, Easebuzz and Bbetter, 8i Ventures is well-positioned for continued success.
“We felt we could let one go, who did his job,” says Chachra, reflecting on the decision to leave M2P Fintech. “He had gotten to the point of returning the funds and some.”
Looking ahead, 8i Ventures plans to focus on its second $50 million fund and the Origami program, with an emphasis on investments in the fintech and e-commerce sectors.