VCs looking for partial exits, investors eyeing IPO-bound firms push up secondary deals

economictimes.indiatimes.com:

Venture capital investors are increasingly demanding partial exits from late-stage startups as pressure to clock returns increases amid a slump in the technology market. Sizeable investment rounds of $50 million in the past year have included a significant secondary component that provides liquidity for existing investors, several industry executives said.

Industry sources aware of the goings-on at mid-scale startups, who spoke to ET, said existing investors in such companies are demanding exits even at reduced valuations. A Bengaluru-based startup offering supply-chain solutions for retail businesses — last valued at around $300 million — is facing a significant cut in valuation along with ongoing discussions for secondary deals, according to one person cited above who said, “This is only one example and more such deals are currently structured that will play out in the coming months.”

Elevate Your Tech Prowess with High-Value Skill Courses

Meanwhile, investors told ET there is a pickup in demand for secondary stakes in companies that are going the IPO route.

The growing demand for exits by early backers comes at a time when venture investments dipped drastically to $9.6 billion in 2023 from a high of $38.5 billion in 2021, according to Bain & Company. In 2022,