EXCLUSIVE: Prosus to double down on Urban Company with $30M investment

Prosus, one of the world’s largest technology investors, is doubling down on its investment in home services platform Urban Company, as the Netherlands-based investor seeks to expand its stake ahead of the startup's anticipated public listing next year.

Prosus, which has backed some of the country’s biggest startups, such as Swiggy, Meesho and Eruditus, among others, will be investing about $30 million in an all-secondary transaction, giving a partial exit to Bessemer Venture Partners, four people aware of the matter told YourStory. The transaction will happen at a flat $2.6 billion valuation, the sources said, requesting anonymity. Secondary transactions, it should be noted, typically happen at slightly lower valuations.

Accel Partners and Elevation Capital, two early backers of Urban Company, had sold part of their holdings to Dharana Capital in an all-secondary transaction worth around Rs 400 crore in July. Although both firms were considering further stake sales, they have now put those plans on hold and will await the company’s initial public offering (IPO) next year, according to the sources.

“Both Accel and Elevation Partners were discussing selling larger stakes but have dropped the plans and will only look at selling at the IPO (initial public offering),” one of the people quoted above said.

“There was a media report that suggested Steadview was also looking to sell, but even that’s off the table. It’s just Bessemer selling the largest chunk and small secondaries for Accel and Elevation. Urban Company is among the few good assets and it’s an opportunity for someone like Prosus to make the most of it, double down, and see it (valuation) grow at the IPO next year,” the person added.

Prosus, Accel, Urban Company, and Steadview declined to comment. A query sent to Mukul Arora of Elevation Partners remained unanswered.

Accel and Elevation's decision to hold on to their stakes in Urban Company contrasts with the recent trend in India's venture capital landscape, where numerous early-stage VCs are opting for exits from their portfolio companies as they approach the end of their initial fund cycles. The CapTable, in April, had written in detail how VCs, such as Orios Venture Partners, Peak XV Partners, and Chiratae Ventures, among others, were looking to sell stakes in secondary transactions.

On the other hand, Prosus' move to increase its stake in Urban Company comes on the heels of a substantial multi-hundred-million-dollar gain from its investment in Swiggy, a food delivery and quick commerce firm preparing for an IPO later this year. Despite facing significant losses in two of its major Indian investments—Byju's and Pharmeasy—Prosus is now concentrating on capitalising on its other seemingly successful ventures.

Prosus is also looking to diversify its stake beyond tech investments. In September, Prosus invested $100 million in Vastu Housing Finance, while it is also set to invest around $40 million in jewellery platform Bluestone.

Founded almost a decade back by Abhiraj Bhal, Raghav Chandra, and Varun Khaitan, Urban Company last raised primary funding in 2021 from a host of investors, including Tiger Global Management, Dragoneer, Steadview, and Prosus, among others. The company was valued at $2.6 billion then. It has initiated conversations with some investment banks for an IPO.