Tech3 | Funding is back, with a catch; GCCs outpay IT firms for tech talent; and more

One quick thing: General Atlantic, Prosus ask SC to hear their concerns in Byju's insolvency?

In today’s newsletter:?

• Funding is back, with a catch
• GCCs outpay IT firms for tech talent
• Space incentives linked to state policies

Funding is back, with a catch From Meesho to Lenskart and Purplle to Rebel Foods—what do all these companies have in common??

• Over $100 million funding rounds each. But there’s another trend that unites them

Tell me more: Gone are the days when fundraising rounds were predominantly primary in nature. All of these startups, along with others raising huge capital, are also seeing significant secondary transactions, which has led to?increased total round sizes.

• This new trend of combining primary and secondary components signals a shift in fundraising style compared to 2021

Since secondaries happen at a steep discount in valuation, the entry price for investors is now more attractive.

“In 2021, deals were mostly fully primary in nature but now the default is…a portion of primary capital infusion…but also a secondaries component. This creates exit opportunities for early backers and delivers a better blended price for the incoming investor,” Rahul Taneja, Partner, Lightspeed, told us.?

Take for instance Rebel Foods.?

• It had a valuation of $1.3 billion in the primary market but was valued at $700-800 million during secondary transactions, sources told us. That meant Rebel had a blended valuation of $1 billion?

Secondaries are also happening because investors need to return capital to their limited partners, the ones that sponsor venture funds. The market is really hot right now!?

Not everyone is investing: While investors say the quality of companies has improved, they believe more needs to be done.?

“We’re still looking for the next Harsha (Swiggy chief Sriharsha Majety), the next Sahil (Delhivery chief Sahil Barua)...we’re looking hard, but have not found them and that’s why we haven’t started reinvesting yet…we need a lot of that (founder) pipeline to come through,” Sumer Juneja at SoftBank Investment Advisers had said earlier. Dig deeper

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