VC firm Chiratae Ventures gets $70 million after selling stakes in portfolio startups to Madison India

Bengaluru-based technology venture capital firm Chiratae Ventures has reportedly sold stakes in some of its portfolio startups to Madison India Capital.

According to an ET report, the VC firm has sold stakes in several of its high-profile portfolio companies, including the likes of Lenskart, Bizongo, and Rentomojo.

The deal, which is valued at approximately $70 million, marks a pivotal moment for Chiratae, an early-stage investor known for backing successful startups such as Lenskart, FirstCry, and Policybazaar.

The mechanics of the deal

The transaction encompasses stakes from Chiratae's Fund-II, valued at $95 million, and Fund-III, with $208 million in capital.

Madison India Capital, a firm backed by Lexington Partners, a notable entity specializing in secondary transactions, facilitated the bulk secondary deal. The stakes divestment was part of Chiratae's broader initiative to offload shares in select companies for a profitable exit.

The backdrop of venture capital challenges

The report comes at a critical time when venture capitalists in India face mounting pressure to demonstrate returns on investments. The venture capital ecosystem has been grappling with slow returns, prompting a cautious approach towards investments. 

The trend towards secondary sales has been gaining momentum as a viable exit strategy, allowing investors to realize partial exits from their portfolios. 

Chiratae's strategic exits

For Chiratae Ventures, this is not the first instance of leveraging secondary transactions for exits. The firm previously made a significant exit from Lenskart, cashing out more than $100 million in a $500-million secondary round led by the Abu Dhabi Investment Authority. Implications for the Venture Capital Ecosystem