Synopsis
YourNest Venture Capital has launched a Rs 400 crore continuation fund, YourNest Continuum Fund I, anchored by HDFC AMC. This fund will invest in seven top-performing deeptech startups, providing liquidity to existing investors while enabling continued growth for companies like Miko and Exponent Energy towards future exits.Listen to this article in summarized format
The fund will invest about Rs 60-90 crore in a portfolio of seven companies, including Miko, Dozee, Exponent Energy, Twid, Opkey and Thriwe, Sunil Goyal, managing director of YourNest Venture Capital, told ET.
Called YourNest Continuum Fund I, the fund will provide liquidity to existing investors while allowing the venture firm to remain invested in these startups for another five to seven years as they scale towards larger outcomes, including strategic acquisitions and public listings.
"These assets (companies) have already crossed the initial technology, people and market-validation risks. They are now at the stage where they need capital to scale, and LPs (limited partners) are willing to back a well-identified portfolio rather than wait through a traditional 12- to 15-year venture cycle," Goyal told ET.
Founded in 2011, YourNest portfolio spans sectors such as artificial intelligence, healthcare technology, enterprise software, mobility and consumer technology.
According to Goyal, as deeptech startups scale, the ecosystem cannot thrive on primary capital alone. "It also needs a healthy secondary market, and continuation vehicles are among the most effective tools for creating liquidity while retaining ownership of high-quality assets," he added.
Globally, continuation vehicles have become a popular mechanism among private equity and venture investors seeking to maximise returns. In India, the model is slowly picking up pace, industry experts said.
Goyal added that these companies are still not private equity assets and continue to need the "monitoring and handholding" of investors who have worked closely with them for years. "While they have scaled up, many are still raising capital and have not yet reached the stage where pure secondary investors or private equity funds would typically step in."
Suitable for deeptech
Goyal said the structure is particularly suited for deeptech startups, which often require longer development and commercialisation cycles than consumer internet or software businesses.
"Deeptech companies need patient capital. Many of these businesses take years to build proprietary technology, acquire customers and reach scale. A traditional fund structure can sometimes force exits before the full value has been created," he said.
According to YourNest, the companies moved into the continuation vehicle have collectively generated nearly 11-fold returns across its earlier funds. The firm's first fund, launched in 2012, has now been formally closed with a distributed-to-paid-in capital multiple of 3.3 times.
YourNest's portfolio companies collectively hold more than 280 patents, which have become an important factor in attracting strategic investors and acquirers, Goyal said.
Venture firms, corporate investors and government-backed funds are increasingly backing startups across the deeptech sector. Government initiatives such as the Rs 1 lakh crore Research Development and Innovation scheme and sector-specific reforms have pushed more fund houses to launch deeptech funds.
