Former Peak XV MD launches secondaries fund as VCs look beyond traditional exits
Kenro Capital has entered the ecosystem at a time when there is a surge in the number of secondary transaction-focused venture capital firms, driven by early-stage startup investors exploring faster exit alternatives beyond public listings and acquisitions.
Piyush Gupta, a former managing director at Peak XV Partners, has launched Kenro Capital. The venture capital (VC) firm specialises in growth secondary transactions to provide much-needed liquidity solutions to investors.
In secondary transactions, shares are exchanged between investors at a mutually agreed price, without involving the infusion of new capital into the company or the issuance of additional shares. Secondary-focused VC firms purchase shares from early-stage VC investors, offering them liquidity to return capital to their Limited Partners (LPs).
An industry veteran, Gupta launched the new fund with Norbert Fernandes, a seasoned India-focused private equity professional with over 17 years of investing experience across Temasek, IvyCap Ventures, and TR Capital.
Kenro Capital will invest in companies in India and Southeast Asia, Gupta told YourStory in a virtual interaction. The VC firm, which has raised an undisclosed amount, all from foreign LPs, is domiciled in Singapore and will be investing around $20-30 million in growth secondary transactions, he said.
“There’s a gap of about $100 billion in the venture capital invested and exits monetised and with the pace of investments growing significantly over the last five years, this gap is only going to grow,” Gupta told YourStory.
“The reason we are doing this now is because we are seeing the VC ecosystem maturing in India with DPI (distributed to paid-in capital) getting more prominence over metrics like returns. Startups are also moving towards profitability faster and so the IPO exit option is also becoming more viable. VCs are so more amenable to driving exits,” he added.
Kenro Capital will focus on acquiring minority stakes in growth companies across various sectors that have reached revenue scale, are profitable or close to profitability, and possess other key attributes that position them for a potential public listing within 2-3 years of its investment, Gupta noted.
Kenro Capital has entered the ecosystem at a time when there is a surge in the number of secondary transaction-focused venture capital firms, driven by early-stage startup investors exploring faster exit alternatives beyond public listings and acquisitions.
This trend reflects growing pressure to return capital as many VCs near the end of their first fund cycle. Secondary-focused VC firms like Kenro typically sell stakes through a public listing or acquisition, while offering immediate liquidity to early-stage VCs. Historically, India has been viewed as a challenging market for achieving successful exits.
According to a report by Moneycontrol, shares of startups such as Innovaccer, BharatPe, ShareChat, Cult.fit, and Meesho, among others, have been in the market and have exchanged hands.
“GPs (General Partners at VC firms) are also getting more disciplined about taking some chips off the table in a regular fashion. I saw that happen over the last seven years, where it would start (for GPs) with questions like 'what is a secondary transaction' to them actually proactively seeking these kinds of solutions,” Fernandes told YourStory in a virtual interaction.
“The motivation for GPs is also to crystalise returns which helps them raise their next fund if they show a strong DPI at the end of the fund cycle,” Fernandes added.
Kenro Capital, unlike private equity (PE) or buyout firms engaged in secondary transactions, will focus on holding minority stakes in startups. In contrast, PEs and buyout firms typically acquire large stakes in companies. The VC will solely focus on growth secondary transactions, Gupta and Fernandes told YourStory.
Edited by Kanishk Singh