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Trifecta’s equity fund targets start-ups with 1-3 yr liquidity outcome potentials

Trifecta’s equity fund targets start-ups with 1-3 yr liquidity outcome potentials

Launched in May 2021, the fund marked its first close in July and has already deployed approximately Rs 730 crore across eight companies.

Lavanya Ashok, Partner, Growth Equity at Trifecta Capital, said the firm is not taking a timing bet on when an IPO would materialize Lavanya Ashok, Partner, Growth Equity at Trifecta Capital, said the firm is not taking a timing bet on when an IPO would materialize

Venture debt provider Trifecta Capital on Tuesday had announced the final close of its maiden equity fund Trifecta Leaders Fund – I at Rs 1,500 crore. The company added a greenshoe of Rs 375 crores to the fund, which it expects to close in a quarter from now.

Lavanya Ashok, Partner, Growth Equity at Trifecta Capital, said the firm is not taking a timing bet on when an IPO would materialize, rather it would invest in companies which are targeting a liquidity event in less than three years. 

“We are investing in companies which are likely to pursue a liquidity outcome over the next 1-3 years. For companies that list, we have the flexibility to either exit in the IPO or keep holding beyond this if we believe the prospective returns continue to be very strong. In the case of M&A and secondary sales to other funds or strategic investors we will likely make clean exits of our entire position,” she said. 

Launched in May 2021, the fund marked its first close in July and has already deployed approximately Rs 730 crore across eight companies such as Dailyhunt, Livspace, Cars24, Pristyn Care, ixigo, the Good Glamm Group, API Holdings (Pharmeasy) and Meesho. 

“Even with in a growth/late stage, there are three flavours of companies. Firstly, start-ups in the hyper growth phase which would potentially think of an IPO in 3-4 years. Then there is that intermediate group with crossover investors, they say they will be ready in 2-3 years. The third group that wants to go public even sooner because they feel they are ready,” she added. 

The fund invests in category leading, growth to late-stage start-ups, selected predominantly from its portfolio across venture debt funds.

“The fund is filling a structural gap in the late-stage VC ecosystem in India, and in addition to primary infusions, will cater to the unmet needs of late-stage companies by providing off-cycle liquidity to early investors, angels, current and former employees including consolidation of equity cap tables.”   

The fund backs growth to late-stage, category leading tech companies that are maturing both from revenue and scale perspective as well as from a profitability and strong unit economic perspective.

The fund invests $15-25 million in each company for minority stakes, through a combination of primary and secondary positions. Trifecta expects to fully deploy the fund by end of this calendar year or by early next year. 

“We have been disciplined about our portfolio construction approach. Our portfolio companies currently have over Rs 17,000 crore of cash on their balance sheet to pursue their growth plans for the next 18-24 months without needing to raise additional capital in volatile times and are likely to grow at over 50 per cent annually over the next few years. This year could also be a very good vintage year for making new investments because price expectations would likely correct on new deals as well. Companies that need capital will raise and hopefully valuations will be more attractive,” she said.

Trifecta Capital currently manages three venture debt funds in addition to the equity fund, with cumulative commitments of Rs 4,500 crores. The company has invested over Rs 3,500 crores in 100 start-ups over the last seven years.