Former Peak XV MD Piyush Gupta launches Kenro Capital, eyes secondary deals

Mumbai: Piyush Gupta, the former managing director of venture capital firm Peak XV, on Thursday launched Kenro Capital to target late-stage secondary deals, as demand for exit opportunities among early investors in startups rises.

The fund will eye deals in financial services and consumer sectors with a focus on tech-led companies, Gupta told Mint. The firm plans to deploy $20-30 million per investment, with flexibility for larger amounts through co-investment opportunities, he added.

This comes months after Gupta exited Peak XV to launch his own fund after identifying a gap in the market for secondary funds. “Consider the hundreds of venture firms, founders, employees and corporate venture capitalists investing in startups. When they have to think about an exit, who do they turn to? There’s nobody. And that’s the opportunity we are focusing on,” he said.

Gupta also said that Kenro is in discussions to raise funds, but did not divulge more details.

Also read: Peak XV is far from the Sequoia tree. Can it retain its parent’s aura?

Within the focus sectors, Kenro Capital will target minority stakes in growth companies that have achieved revenue scale, are profitable or are near profitability. The company will also prefer firms with the potential of a public listing in 2-3 years after its investment.

Gupta believes that a secondary-only fund is essential in India today due to the maturing VC ecosystem, with some funds now 17-18 years old, creating demand for exits. He added that with the Indian IPO market opening, secondary funds have clearer and more reliable opportunities for liquidity. “Capital markets have deepened a lot, and the IPO exit flywheel is working slowly,” he added.

Kenro Capital will focus its investments on growth secondaries in India and Southeast Asia's venture ecosystem.

Gupta is joined by Norbert Fernandes, a private equity professional who has worked with Temasek, IvyCap Ventures and TR Capital. While Fernandes will be based out of Mumbai, Gupta will continue to be stationed in Singapore, with plans to build their team to “five to six investment professionals” in the fund.

Also read: Why you should approach the SME IPO market with extreme caution

The startup ecosystem in 2024 has started to see a resurgence in late-stage funding, particularly in pre-IPO rounds. At the same time, many companies that previously raised funds at sky-high valuations, and had shifted their focus toward profitability, may enter the funding queue once again after sitting quiet for the past two to three years.

Kenro Capital sees this as an opportunity, too. “There are rounds happening that are flat compared to the last round, and in some cases, some of them are even down rounds. We’re not counting on it, but that’s generally how valuations come into a comfort zone—when the general market gets beaten down, including high-quality assets,” said Fernandes.

He added that flat rounds based on two-year-old valuations are possible especially if the company has grown by 50-60% in that time. "We have to seize those opportunities when they arise," Fernandes said.