Lightspeed India expects to realise approximately $500 million in cash returns by year-end, driven by a broadening exit landscape across multiple channels. According to Anuj Bhargava, managing director and head of corporate and strategic development for India and Southeast Asia, this figure spans exits through private secondaries, mergers and acquisitions, block deals and initial public offerings over a 3.5-4 year horizon. The venture capital firm, which has backed startups such as Razorpay, Sarvam and Oyo, is seeing increased traction in private secondaries and M&As alongside traditional public market exits.
Some of Lightspeed's recent exits include a partial sale of its stake in Darwinbox through private secondaries and a block deal in Physics Wallah. A private secondary transaction refers to shareholders selling their stakes to other existing or new investors, where no new capital is injected into the company. The firm has sold positions in enterprise SaaS companies to large US-listed companies, with notable acquisitions including Revv by NASDAQ-listed LegalZoom in 2022, Adobe's acquisition of Bengaluru-based AI video creation startup Rephrase.ai the following year, and Palo Alto Networks' acquisition of Portkey earlier this year.
Since 2007, Lightspeed India has deployed about $2.5 billion across its early and growth strategies in more than 115 active portfolio companies. The firm has a steady pipeline of companies looking to tap the public markets over the next few months, with some IPO-bound companies including Oyo, Razorpay, Zetwerk, ShareChat and Zepto, many of which have filed their draft papers with Sebi. Historically, India has not been a big M&A market, with around 70% of early-stage investor exits in the US coming through M&A, compared to a far lower share in India, though this is now picking up in sectors such as consumer and fintech.
Venture capital and private equity firms are increasingly turning to block deals to monetize their stakes, with Accel, Elevation Capital, Alpha Wave and Temasek among those to have executed such transactions in the past six months. According to Bhargava, it is easier for public-market funds to buy these stakes in blocks as they have tracked the companies and their performance for two to three years. The investment ecosystem is seeing a more definite structure around liquidity pathways in India, with private secondaries activity being a great source of exits for early-stage funds.
Lightspeed is currently in the market to raise its fifth India fund with a target of about $300 million from the previously planned $500 million fund, as per various news reports. The firm is in the market to raise its fifth India fund with a target of about $300 million from the previously planned $500 million fund. Bhargava noted that continuation funds are an attractive option for investment firms nearing the end of a fund's life, allowing them to retain high-performing portfolio companies while providing liquidity to limited partners. Globally, Lightspeed built a $600 million continuation fund called Project Mercury last year to extend its ownership in six companies: OpenAI, Anthropic PBC, Verkada, Rippling, Reflection AI and Glean Technologies.
