GrowX reaps a bonanza from space-tech firm Pixxel

“We have part exited post the series B round, and most of the shares were bought by Athera and Sparta alongside an undisclosed third investor. We continue to hold more than 75% of our stake in Pixxel as we believe that the company will grow rapidly over the next few years,” said Sheetal Bahl, partner at growX Ventures Fund and Merak Ventures.

The transaction has generated a 17x multiple on invested capital (MOIC) and a 68% internal rate of return (IRR) over 5 years. With this exit, growX will return about 15% of the fund to the limited partners. The venture capital firm has invested about ₹11 crore across multiple tranches in Pixxel since 2019. 

Strategic positioning

This also marks the first liquidity event for growX Fund I, a $25-million ( ₹162 crore in 2018) early-stage fund, which has backed 17 B2B technology startups across sectors like deeptech, fintech, SaaS, and healthtech. Its portfolio includes companies such as Bellatrix Aerospace, Progcap, Zuddl, AdvantageClub.ai, CynLr, Lightspeed Photonics, and 4baseCare.

This development comes a few months after Pixxel raised about $24 million in an extended series B funding round in December from new investors such as M&G Catalyst and Glade Brook Capital Partners. Some of their other investors include Google, Radical Ventures, Lightspeed, and others.

Bahl explained that the part exit was made to strike a balance between the company’s future growth opportunities and its ability to demonstrate some exit capability. “Over the course of this year, we anticipate a few more exits,” he added.

Bahl’s partner Manu Rikhye added that the fund has begun to scout for exit opportunities to show some liquidity and looks to take part exits in a few of its other assets as well. “Pixxel’s part exit was primarily in line with this strategy. This is a post-series B, pre-series C kind of opportunity that came to us with an attractive price.”

Investor expectations

Broadly, several investors have taken to exits more proactively in the last 12-18 months as limited partners, who are investors in venture capital and private equity funds, seek some liquidity. “While we believe in the long-term potential of Pixxel, we also wanted to demonstrate to our investors that these are real multiples,” Rikhye said.

Bahl added that many investors believe that these assets are only on paper as they have not seen the returns in real terms. “One of the biggest points of contention that global LPs have with Indian funds is that they are not returning money although paper returns look great which is also one of the reasons, we have taken a small part of our shareholding from Pixxel,” he said, adding that more funds are paying attention to this aspect.

Meanwhile, growX used to operate as an angel syndicate before it launched its first fund in 2019, by raising capital from friends and family to invest in early-stage B2B startups in India. Some of growX’s exits as an angel syndicate include Locus Logistics (acquired by GIC), Quandl (Nasdaq), AdSparx (Discovery), FortunePay (Ezetap) and Fynd (Reliance Industries). An angel syndicate is a group of angel investors who come together to invest in a startup.

In 2022, Bahl and Rikhye launched Merak Ventures with a $100 million maiden fund with the same investment thesis. To be clear, the two partners who previously managed growX Ventures’ $25-million early-stage fund will continue to handle only the operations for Fund I. The growX brand is separate, and Rikhye and Bahl will have no role to play in any funds raised in future.

Key takeaways 

1. GrowX Ventures Fund partially exited its stake in space-tech startup Pixxel, generating a 17x return on invested capital and a 68% internal rate of return over five years.
2. Despite the partial exit, growX still holds over 75% of its stake in Pixxel, showing confidence in the company’s future growth potential.
3. This exit marks the first liquidity event for growX Fund I, a $25-million early-stage fund that has backed 17 B2B technology startups across sectors like deeptech, fintech, SaaS, and healthtech.
4. Pixxel raised $24 million in an extended series B funding round, attracting new investors like M&G Catalyst and Glade Brook Capital Partners. 
5. The exit highlights a shift in investment strategy among venture capital firms in India, as global investors increasingly demand realized returns rather than paper valuations.