Size no bar: Why smaller startups are making a beeline for public markets

On October 2, Peak XV Partners, one of India’s leading venture capital firms, told its investors (Limited Partners, or LPs) that it would return approximately $465 million from its latest $2.85 billion fund. 

The firm said that it aimed to deploy capital more cautiously since the Indian public markets have seen a significant re-rating, with mid-cap P/E (price-to-equity) multiples expanding over the past year, leading to elevated valuations in late-stage growth and pre-IPO companies. 

For instance, the average P/E ratio of the Nifty Midcap 100 index, which has traditionally hovered around the mid-20s (barring the early irrational exuberance of Covid), currently stands at around 45.

While Peak XV will continue investing in seed and early-stage startups, its investments in growth-stage companies will now be more measured.