New Delhi, Aug. 11 -- Homegrown private equity firm WestBridge Capital and venture capital firm Titan Capital are looking at divergent outcomes from their investment in an Indian enterprise artificial intelligence startup that has signed a pact to go public in the US through a merger with a special purpose acquisition company (SPAC).
The agentic AI company, Yellow.ai, will merge with Bluerock Acquisition Corp., a Nasdaq-listed SPAC, in a transaction that marks the combined entity's pro forma equity value at about $550 million. Upon completion of the deal, the combined company will operate as Yellow.ai and trade on the Nasdaq Capital Market. The listing will help Yellow.ai to tap public markets amid rising enterprise demand for agentic AI solutions.
Yellow.ai's pre-money equity valuation in the transaction is about $300 million (about Rs 2,850 crore). The company is expected to generate more than $200 million in gross proceeds through the listing. This includes about $175 million held in Bluerock's trust account, assuming no shareholder redemptions, along with $30 million in committed private investment in public equity (PIPE) financing from institutional investors. Yellow.ai's founders and senior management are also participating in the PIPE round.
The startup said it will deploy the proceeds to strengthen its agentic AI platform, expand enterprise sales across North America and Europe, scale global operations and pursue acquisitions of business process outsourcing companies, which it plans to transform into AI-native operations powered by its platform.
Yellow.ai's investors
Yellow.ai last raised around Rs 580 crore in 2021 as part of a Series C funding round led by WestBridge Capital, with participation from Sapphire Ventures, Salesforce Ventures and Lightspeed Venture Partners. The round took the company's total funding to more than $100 million and valued it around $428 million (about Rs 3,178 crore then), according to VCCEdge.
Barring Lightspeed, the other three investors backed the startup for the first time and may now be sitting on notional losses considering its valuation in the SPAC deal is lower than the Series C round.
Lightspeed had invested in the company's Series B and Series A rounds, too. Yellow.ai scooped up $20 million (Rs 151 crore then) in the Series B round in 2020 at a valuation of $70 million and $4 million (Rs 27.7 crore then) in the Series A round in 2019 at a post-money valuation of $9.6 million, according to VCCEdge.
Lightspeed's total investment across the three rounds cound't be ascertained. However, another Series A investor, Snapdeal co-founders' VC firm Titan Capital, would be sitting on gains on its investment given the increase in Yellow.ai's valuation since then.
Yellow.ai was founded in 2016 by Raghu Ravinutala, Rashid Khan and Jaya Kishore Reddy. It is registered in the US as Bitonic Technology Labs Inc. and operates in India through the locally registered company Bitonic Technology Labs Pvt Ltd. The India arm posted revenue of Rs 235.8 crore and EBITDA of Rs 2.65 crore for FY25, VCCircle has gathered.
The company develops enterprise AI agents that automate customer service and business workflows across voice and chat channels. Its platform supports more than 135 languages and processes around 16 billion conversations annually across enterprises in over 85 countries.
The company said enterprise customers contribute more than 70% of its recurring revenue, reflecting its shift towards large enterprise contracts. Its voice AI platform, Nexus Vox, is currently its fastest-growing product.
Yellow.ai counts more than 700 enterprise customers, including Domino's, Hyundai, MG Motor, Swiggy, Bajaj Finserv, Bharat Petroleum and Tata Capital.
Published by HT Digital Content Services with permission from VC Circle.