BENGALURU: Over 40 per cent of family offices have doubled their allocation to private markets in the past five years and the interest of larger cheque writers to have a direct participation in a startup’s cap table is increasing, showed Trica’s Private Monitor Report. Nimesh Kampani is the co-founder and CEO of Trica, a LetsVenture company.
Respondents said their private market portfolio comprised 47 per cent direct startup investments, 32 per cent exposure to PE/VC funds, and 11 per cent to venture debt funds. The report said that private market investments remain the alternative investment of choice with allocations to startups and VC funds comprising 18 per cent of the overall pie. This is quite aggressive when compared to a 15 per cent allocation to other alternatives (real estate, infrastructure, art), 20 per cent allocated to fixed income, and 36 per cent to listed equities.
“With IPOs coming in, exit visibility is much clearer than what it used to be. If you look at the fund raise, of this year's $30 billion, 90 per cent is coming from foreign money and this trend will change going forward. Indian VCs have raised record money this year, almost Rs 25,000 crore, plus the direct investments made by family offices. It's a very good signal for the Indian economy,” said Kampani. The first edition of the report has been brought out by Trica in partnership with AZB & Partners and EY.
33 of India’s 71 unicorns were created this year as of October and reports have pegged India as having 150 unicorns by 2025. The report said 50 per cent of family offices surveyed preferred the seed to Series A stage to enter a startup investment, 40 per cent preferred late to pre-IPO transactions. “A large portion of India’s family offices and UHNIs have been late to participate in the startup boom. The cap tables of present Indian unicorns are dominated by global VC and PE funds and this has meant lower exposure of family offices to tech startups that are in the IPO pipeline,” the report said.
But digital platforms are now making it easier for founders of large companies to run more frequent liquidity transactions in a simple and scalable manner. In fact, 39 per cent respondents preferred secondary opportunities versus 46 per cent who prefer primaries and 15 per cent who actively explore convertibles.
Fintech and enterprise tech were the top two sectors of choice by a clear majority. For fintech, a massive opportunity has been opened by Aadhaar, UPI and the account aggregator framework and India has seen the fastest pace of unicorn creation in this space. Enterprise tech is riding the wave created by the large number of Indian software product companies that have successfully gone global - the recently Nasdaq listed Freshworks being the poster boy of Indian SaaS. "A surprise was seeing muted conviction for the consumer tech space and this preference being at par with frontier tech opportunities," the report said.
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