If there is one major problem affecting the otherwise thriving startup ecosystem of India, it is the lack of exits and liquidity options for early-stage investors. Startup data analytics firm Tracxn has launched an online platform, called TracxnSecondary for this purpose, reports LiveMint.
The efforts are already being made by the government for introducing the guidelines and laying down the ground framework for the same under its scheme to boost startup and entrepreneuship in the country. Tracxn platform aims to further streamline the process and increase liquidity in India.
TracxnSecondary will enable the early stage investors of popular startups to connect with venture capital firms and instittuinal investors and sell their shares to them. This will help them to make exits as well as put the funds in the next big idea.
On the other hand, the VCs and other institutionoal investors will be able to invest for the future growth and expansion of an already established business.
Angels want to make more investments. The market is really attractive, (but) they’re all looking for liquidity. At the same time, there are a lot of international funds who want a small exposure to India. So there’s demand (for such a platform) on both sides,
says Abhishek Goyal, co-founder, Tracxn.
Initially, TracxnSecondary is aiming for a portfolio of 10 companies which have already raised more than $30 million. These companies include the likes of Flipkart, PayTm, and Snapdeal among others. They have already started working with some angel investors in these companies who are looking for an exit.
Angels provide the much needed initial capital. However as startups mature, many more institutional investors are willing to invest but may always get the opportunity. Through TracxnSecondary, angels can transact with these institutional investors. This in turn will help redeploy capital into new ideas,
says Neha Singh, CEO & Founder, Tracxn.
The company also intends to work with large family offices who are looking to invest in start-ups.
In addition to this, TracxnSecondary is planning to enable the employees to liquidate their stocks in the companies. These stocks come under the ESOP(Employee Stock Ownership Plan) which are being offered these days as a part of the compensation package by many high value companies.
While that may not be any time soon as it requires more regulation and tie-ups with companies before implementing it, Tracxn is already planning to expand TracxnSecondary to Southeast Asia within a month of its launch to address the demand of secondary stocks from emerging markets.
Goyal commented on this plan and said,
These are the geographies where the ecosystem is new and there aren’t many structured secondary avenues.There is a huge interest in investing in startups from emerging markets, and in buying secondary stocks. We aim to bridge this gap through TracxnSecondary and help them connect with early angels .
Founded three years ago, Tracxn recently raised an undisclosed amount of funding from Nandan Nilekani, Mohandas Pai, Neeraj Arora, and Anand Rajaraman.
The firm had initially started as a market research firm focussed exclusively on tracking and gathering data about startups in order to help the investors and VCs to make a good investment decision. However, it has slowly expanded beyond data analytics.
It now also has an incubation centre for startups called TracxnLabs to help the new startups through funding and mentorships, and another online platform called Tracxn Syndicate to connect start-ups with potential investors.