New Delhi, Aug. 27 -- Global venture capital firm Lightspeed, which is raising its fifth India-focused fund, has fully exited a local edtech company it backed less than two years ago with modest gains on its investment.
The multi-stage VC firm that invests in India both through locally registered funds as well as its global vehicles has sold its entire 1.61% stake in PhysicsWallah Ltd via open market transactions, stock-exchange data show.
It pocketed about Rs 550 crore ($57.6 million) in the process, back-of-the-envelope calculations show.
The sale comes less than two years after Lightspeed invested in PhysicsWallah as part of its Series B funding round and barely nine months after the Noida, Uttar Pradesh-headquartered company went public.
PhysicsWallah became the first homegrown VC-backed edtech startup to float an initial public offering in November last year. The IPO comprised Rs 3,100 crore in a fresh issue and an offer for sale of Rs 380 crore by the company's founders. None of PhysicsWallah's investors sold any shares in the IPO.
The company priced its IPO at Rs 109 per share, valuing it around Rs 31,526 crore ($3.56 billion then). Its shares have risen 14.4% since then, giving it a market capitalisation of Rs 36,174 crore ($3.8 billion at current exchange rates).
After Lightspeed's exit, its remaining investors include homegrown private equity firm WestBridge Capital-the largest investor in the company's Series A round in June 2022-as well as GSV Ventures and Hornbill Capital.
WestBridge and GSV had invested at a time when PhysicsWallah was valued at $1.1 billion. Just over two years later, in September 2024, the company secured Series B funding at a post-money valuation of $2.8 billion. The cost of entry for the investors who joined the cap table at the Series B stage-Hornbill and Lightspeed-was significantly higher.
Lightspeed had invested Rs 419.6 crore (about $50 million then) in PhysicsWallah through one of its opportunities funds. This indicates it logged a multiple on invested capital of 1.3x and an internal rate of return (IRR) of only 15.7% in rupee terms, VCCircle estimates show. In dollar terms, its IRR is barely hitting 8%, thanks to the rupee's 11.9% decline against the greenback since the VC firm invested, the estimates show.
This means Lightspeed has missed the 20% benchmark in rupee terms and 15% in dollars.
The exit from the edtech company comes a few months after Lightspeed India Partners, the American VC's local franchise, sold its entire stake in logistics-tech company Freight Tiger to Tata Motors Ltd with an IRR of just 4% on its nine-year investment.
Meanwhile, Lightspeed registered its fifth India-focused fund earlier this year-nearly four years after it closed its fourth local fund at $500 million to bet on early-stage startups in India and Southeast Asia.
Lightspeed has been operating in India for almost 20 years. Its first investment was in 2007, when it bet on online education company TutorVista Global Pvt. Ltd. The firm initially took money out of its global funds before launching its first India-specific investment vehicle of $135 million in 2015 through Lightspeed India Partners. It raised $175 million for its second India vehicle in 2018 and $275 million for its third fund in 2020.
Published by HT Digital Content Services with permission from VC Circle.