India: Bumper listing of E2E Networks may open up viable exit gate for VCs

Sanjay Nath and Karthik Reddy, founders of Blume Ventures. Photo: Abhijit Bhatlekar/Mint

The stellar listing of cloud computing infrastructure platform E2E Networks Ltd backed by early-stage venture capital (VC) firm Blume Ventures earlier this week could open up a significant opportunity for VC exits through this route, say experts.

The company’s SME initial public offering (IPO) closed on 7 May with a subscription of 70 times. On its listing on 15 May, E2E’s shares closed 56% above its issue price of Rs57.

E2E is engaged in the business of cloud infrastructure which includes servers, networking, storage, virtualization and other open-source software pieces.

Blume Ventures sold 730,000 shares in the IPO. For E2E Networks, the IPO marks the conclusion of a remarkable journey for a start-up that struggled to attract any meaningful attention from investors when it started out, but has ended up multiplying its revenues since then, said Karthik Reddy, co-founder and managing partner at Blume Ventures.

“The company grew to this point with less than $0.5 million in total equity financing in its lifetime and a peak debt of less than $1 million. Now, with a fresh primary infusion and ability to lever that equity, the company can finally drive the growth they’ve been planning for a few years but for which they haven’t had the cushion of expansion capital,” said Reddy.

Experts believe that the successful IPO and post-listing performance of E2E networks will open the opportunity for other VC-backed companies to unlock value and provide exit route to their investors.

“If you see, there are several companies that are growing 20-30% year-on-year and continuously profitable for at least a couple of years, but VCs are not interested. So, for VCs who are already present in these companies, this becomes a great route to realize their investment,” said Anil Joshi, founder of early stage VC fund Unicorn India Ventures.

Overall this offers a great opportunity for not just VC-backed companies but even bootstrapped companies, he said, adding that this will be a viable exit opportunity for VCs going ahead. According to Joshi, the opportunity has opened up with the maturing of the SME exchanges, which has seen investors appreciate the companies listing on these platforms.

This story was first published in livemint.com

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.