TLDR:
- Venture capital firm Lightbox considers a $100 million continuation fund to back mature startups like Rebel Foods and Furlenco.
- Continuation funds provide an exit for limited partners while allowing investment firms to hold on to high-performing portfolio companies.
India’s VC firm Lightbox is contemplating the creation of a continuation fund with a minimum size of $100 million. This fund would support mature portfolio companies such as Rebel Foods, Zeno Health, Furlenco, and PayMate. The trend of continuation funds is on the rise in India, with other investors like India Quotient, Multiples PE, Kae Capital, and Westbridge Capital also exploring similar opportunities.
Typically, continuation funds are established to offer an exit strategy for limited partners while enabling investment firms to maintain investments in successful portfolio companies. These funds are particularly beneficial for assets that require more time to reach their full potential beyond the usual fund cycle.
Lightbox’s continuation fund may also extend its investment to other startups like Amaha, Rooter, and Cityflo. Discussions are ongoing with individual and institutional investors to explore liquidity options for the firm. The fund’s size will depend on the deal structures, and investments will be directed towards companies demonstrating a clear path to liquidity and early-stage businesses with long-term value creation potential.
The popularity of continuation funds is growing in India, driven by an increased focus on secondary markets and investors seeking liquidity towards the end of their fund’s life cycle. Notable examples include Chrys Capital’s $700 million fund, Samara Capital’s $150 million fund, and Blume Ventures’s ₹200 crore fund.
Furthermore, global investors have been able to raise substantial amounts for continuation funds overseas, such as Antler’s $285 million fund, Investcorp’s $185 million fund, and Carlyle’s $2.2 billion fund. This trend indicates a shift towards providing existing LPs with liquidity while retaining growth potential in mature companies.
In conclusion, continuation funds offer a strategic approach for investors to navigate the evolving landscape of venture capital and provide significant opportunities for sustaining investments in high-growth startups.
