GrowX reaps a bonanza from space-tech agency Pixxel

“We have now half exited put up the sequence B spherical, and many of the shares have been purchased by Athera and Sparta alongside an undisclosed third investor. We proceed to carry greater than 75% of our stake in Pixxel as we imagine that the corporate will develop quickly over the subsequent few years,” stated Sheetal Bahl, accomplice at growX Ventures Fund and Merak Ventures.

The transaction has generated a 17x a number of on invested capital (MOIC) and a 68% inside charge of return (IRR) over 5 years. With this exit, growX will return about 15% of the fund to the restricted companions. The enterprise capital agency has invested about ₹11 crore throughout a number of tranches in Pixxel since 2019. 

Strategic positioning

This additionally marks the primary liquidity occasion for growX Fund I, a $25-million ( ₹162 crore in 2018) early-stage fund, which has backed 17 B2B know-how startups throughout sectors like deeptech, fintech, SaaS, and healthtech. Its portfolio contains firms comparable to Bellatrix Aerospace, Progcap, Zuddl, AdvantageClub.ai, CynLr, Lightspeed Photonics, and 4baseCare.

This growth comes a couple of months after Pixxel raised about $24 million in an prolonged sequence B funding spherical in December from new buyers comparable to M&G Catalyst and Glade Brook Capital Companions. A few of their different buyers embody Google, Radical Ventures, Lightspeed, and others.

Bahl defined that the half exit was made to strike a stability between the corporate’s future development alternatives and its skill to show some exit functionality. “Over the course of this yr, we anticipate a couple of extra exits,” he added.

Bahl’s accomplice Manu Rikhye added that the fund has begun to scout for exit alternatives to point out some liquidity and appears to participate exits in a couple of of its different belongings as effectively. “Pixxel’s half exit was primarily in step with this technique. It is a post-series B, pre-series C type of alternative that got here to us with a sexy worth.”

Investor expectations

Broadly, a number of buyers have taken to exits extra proactively within the final 12-18 months as restricted companions, who’re buyers in enterprise capital and personal fairness funds, search some liquidity. “Whereas we imagine within the long-term potential of Pixxel, we additionally wished to show to our buyers that these are actual multiples,” Rikhye stated.

Bahl added that many buyers imagine that these belongings are solely on paper as they haven’t seen the returns in actual phrases. “One of many largest factors of rivalry that international LPs have with Indian funds is that they aren’t returning cash though paper returns look nice which can also be one of many causes, we’ve got taken a small a part of our shareholding from Pixxel,” he stated, including that extra funds are being attentive to this side.

In the meantime, growX used to function as an angel syndicate earlier than it launched its first fund in 2019, by elevating capital from family and friends to put money into early-stage B2B startups in India. A few of growX’s exits as an angel syndicate embody Locus Logistics (acquired by GIC), Quandl (Nasdaq), AdSparx (Discovery), FortunePay (Ezetap) and Fynd (Reliance Industries). An angel syndicate is a gaggle of angel buyers who come collectively to put money into a startup.

In 2022, Bahl and Rikhye launched Merak Ventures with a $100 million maiden fund with the identical funding thesis. To be clear, the 2 companions who beforehand managed growX Ventures’ $25-million early-stage fund will proceed to deal with solely the operations for Fund I. The growX model is separate, and Rikhye and Bahl can have no function to play in any funds raised in future.

Key takeaways 

1. GrowX Ventures Fund partially exited its stake in space-tech startup Pixxel, producing a 17x return on invested capital and a 68% inside charge of return over 5 years.
2. Regardless of the partial exit, growX nonetheless holds over 75% of its stake in Pixxel, displaying confidence within the firm’s future development potential.
3. This exit marks the primary liquidity occasion for growX Fund I, a $25-million early-stage fund that has backed 17 B2B know-how startups throughout sectors like deeptech, fintech, SaaS, and healthtech.
4. Pixxel raised $24 million in an prolonged sequence B funding spherical, attracting new buyers like M&G Catalyst and Glade Brook Capital Companions. 
5. The exit highlights a shift in funding technique amongst enterprise capital corporations in India, as international buyers more and more demand realized returns reasonably than paper valuations.