Those who have just finished their session on fundraising had an opportunity to listen to investor perspective from exit point of view. For the next hour and a half, the participants resolved their queries in issues, ways involved in the exit process.
Rehan Yar Khan, general partner of Orios Venture Partners pointed out that education sector has a huge execution challenge and some way or other they don’t scale up. He added that he is personally skeptical about the exit in this space even though the market is huge.
Investors show no bias if opportunities come from Tier II or III cities, as long as it makes a good business sense. He also said that VCs typically for a significant minority, which ranges between 15 to 30 per cent, in their investee companies.
On exits, he spoke about accelerated dividends as one of the ways to get your returns. One of Orios portfolio companies started paying accelerated dividend to extent of 1x of its investment per annum, which shows its capital efficiency in conducting its business, he said.
He recounted the successful examples of how Paras Pharmaceuticals Ltd was bought by Reckitt Benckiser Group Plc and how Daiichi Sankyo Company Ltd bought Ranbaxy Laboratories Ltd. However, he also said that investor doesn’t make money on everything and it should be looked like a basket of everything.
However, when comes to exit, Khan said that the investors are unanimous in agreeing to IPO as the best exit method because of the tax benefits it offers.
While we were at Orios, simultaneously the last session for the day was also taking place at Nexus Venture Partners (you can read more on that here). You can also read about our other Pit Stops Quikr, Olacabs and Sequoia Capital here, here and here.