Investment
Management and Exit
Strategy
Investment Analysis Oct 22, 2024
Deal Sourcing Engine
Leveraging Existing Networks and Platforms:
Word of Mouth and Referrals: Building relationships within the startup ecosystem can
lead to valuable deal opportunities through personal recommendations.
Building a Specialized Team:
Sector-Specific Analysts: Having analysts with expertise in various sectors can enhance
the firm's ability to identify and evaluate potential investments.
Accessibility: Ensuring that analysts are easily reachable through LinkedIn, VC Mixers
or word of mouth can facilitate direct contact with startups.
Industry Partnerships: Collaborating with industry partners, such as accelerators,
venture capital firms, and corporate innovation labs, to source deals.
Networking Events: Participating in conferences, meetups, and industry-specific events can
facilitate connections with startups and other investors.
HeadStart: A popular platform for startups and investors, providing a curated list of
potential deals.
NASSCOM: India's premier technology industry association, offering access to a vast
network of startups and industry experts.
Echai Events: A platform where investors and startups can connect, network, and
discover promising investment opportunities in a relaxed and informal setting.
Hackathons and Competitions: Identifying promising startups through their
participation in hackathons and innovation challenges.
Engaging with Incubator Programs and Online Database:
IIMs, IITs, and Atal Incubation Center: Collaborating with incubator programs affiliated
with these institutions can provide early access to promising startups.
Online Platforms: Utilizing online platforms like Crunchbase, AngelList, Tracxn and
EverythingStartups to discover and track potential investments.
By implementing this comprehensive deal sourcing mechanism, Titan Capital can effectively
identify and evaluate potential investments, strengthen its network within the startup
ecosystem, and position itself as a preferred partner for promising ventures.
Portfolio Management
Given the early-stage nature of our portfolio companies, active oversight is crucial to
cultivating strong management teams. By developing their capabilities, we can empower
these companies to compete effectively in their respective markets and drive significant
value creation. This will ultimately benefit Titan Capital by maximizing Distributed Paid in
Capital (DPI) to Limited Partners (LPs) upon exit and increasing the valuation of Total Paid in
Capital (TVPI) of these startups. The diversified portfolio, including both consumer,
enterprise and cleantech startups is strategically chosen to optimize returns and mitigate
risk while ensuring sustainable future growth of these companies.
1) Operational Oversight through regular Communication and Meetings:
Review operational plans and execution to ensure alignment with strategic goals.
Offer advice on product development, marketing, and sales strategies.
Conduct regular board meetings to discuss progress, challenges, and strategic
decisions.
Leverage Titan Capital’s extensive founder and investor network to offer guidance
from experienced founders, facilitate key introductions (investors, customers), and
assist with strategic hires.
Identify potential synergies across portfolio companies to foster partnerships,
knowledge sharing, or even co-selling opportunities
2) Financial Performance Tracking:
Monitor key financial metrics, including revenue, profitability, and cash flow.
Provide guidance on financial management and budgeting.
Startup Metric to Track
Average order value:
$2,500 per order, with a 15%
increase year-over-year.
Repeat purchase rate:
WizCommerce 35% of customers place repeat
orders within 60 days.
Customer satisfaction surveys:
4.8/5 average satisfaction rating
from customer feedback surveys.
Daily active users (DAU):
10,000 DAU, with a DAU/MAU ratio
of 40%.
Customer acquisition cost (CAC):
$200 per new customer acquisition.
Monthly recurring revenue (MRR):
$500,000 MRR, with a 25% quarter-
over-quarter growth.
Customer acquisition cost (CAC):
$1,500 CAC, with efforts to lower it
through inbound marketing.
DataWeave Customer lifetime value (CLTV):
$50,000 CLTV per enterprise
customer.
Net revenue retention (NRR):
120% NRR due to upselling
additional analytics services.
Gross margin:
75% gross margin on SaaS
products.
User engagement metrics:
60 minutes average daily usage
per user.
Customer retention rates:
80% retention rate after 6 months
of subscription.
Monthly active users (MAU):
50,000 MAUs with a steady growth
Aroleap
rate of 10% month-over-month.
Subscription renewal rate:
70% annual renewal rate for
premium subscriptions.
Churn rate:
5% monthly churn rate, with efforts
to reduce it by half in the next
year.
Energy efficiency savings:
Reduction in energy consumption by
20% compared to traditional magnet-
based motors.
Environmental impact metrics:
Avoidance of 500 tons of CO2
emissions annually by using rare-earth
mineral-free motor technologies.
Production cost per unit:
Decrease in manufacturing costs by
CharaTechnologies
15% through scalable cloud-controlled
hardware.
Time to market for new products:
Successfully launched a new motor
design within 6 months, 30% faster
than the industry average.
Customer adoption rate:
40% increase in orders from
automotive manufacturers within the
first 12 months of product launch.
Revenue Growth:
30% annual revenue growth driven by
increasing demand for custom IC
design services and embedded
solutions.
Gross Margin:
40% gross margin, with efficient use
of design resources and optimized
project delivery, ensuring competitive
pricing without sacrificing profitability.
Customer Acquisition Cost (CAC):
$50,000 per customer acquisition,
reflecting the cost of onboarding new
Signoff Semiconductors semiconductor clients through
tailored engagement models.
Burn Rate:
$100,000 per month, covering salaries
of highly skilled engineers,
infrastructure, and R&D for new
product development, ensuring
sustainable growth.
Net Profit Margin:
15% net profit margin, reflecting
strong operational efficiency and high-
value contracts with leading clients in
consumer electronics and IoT sectors.
*The above figures are illustrative examples and do not represent actual data*
3) Risk Assessment and Mitigation:
Monitor market trends and competitive landscapes to identify potential risks.
Implement risk management strategies to mitigate challenges and protect
investments.
Provide guidance on financial planning and budgeting.
4) Talent Management:
Ensuring the management develops the key management capabilities of each
department so that the competition cannot easily win over the firm by deploying
capital.
Assess the quality and development of the management team.
Provide guidance on talent acquisition and retention strategies.
5) Value Creation Initiatives:
Support initiatives to enhance company value, such as strategic partnerships,
mergers, or acquisitions. Industry leaders can conduct guest lectures to enhance
employee skills and broaden their perspectives.
Drive revenue growth through effective marketing and sales strategies.
Optimize product development and innovation to meet market needs. Customer
feedback should be actively taken and such changes should enhance customer
experience of product.
Develop a strategic plan for post-market share acquisition growth. Consider
expanding into allied industries within the same sector or exploring adjacent
markets where our team's expertise can provide a competitive advantage.
By implementing this comprehensive portfolio management approach, Titan Capital can
effectively support the growth and development of its early-stage portfolio companies,
while mitigating risks and maximizing returns on investment.
Exit Strategy : Partial or Full?
For Titan Capital's early-stage portfolio, a thoughtful exit strategy needs to balance value
maximization and risk mitigation, while considering the individual growth trajectories of the
companies. Given the diversified portfolio, a mix of partial exits through secondary sales
and full exits through strategic acquisition would be optimal, allowing for continued
exposure to high-growth companies while securing returns at key milestones. Here's a
suggested exit strategy for each company:
Given the early-stage nature of our portfolio companies, an Initial Public Offering (IPO),
Carve Out and Spin Offs as an exit strategy may be premature. They can still capitalize
on their current growth potential, develop key management capabilities and systems,
and establish strategies for scaling to a mass market.
Implementation Strategy for Partial Exits:
A secondary sale involves selling a portion of Titan Capital's stake to other investors,
such as larger venture capital firms or growth equity investors and brings in new
investors with additional resources and expertise to help scale the businesses.
This allows Titan Capital to return some capital to LPs while retaining a stake in the
companies' future growth.
Sell 15-25% of Titan Capital's stake in these companies to larger investors looking for
exposure to early-stage, high-growth potential startups.
The proceeds to provide returns to LPs and potentially reinvest in other portfolio
companies or new opportunities.
Implementation Strategy for Full Exits:
Given the early stage and relatively low valuations (<50 crore) of the portfolio
companies, a trade sale to a strategic buyer or larger company in the same sector
could provide the best returns.
Identify potential acquirers in relevant industries for each portfolio company.
Engage with investment banks or M&A advisors to facilitate the sale process and
maximize valuation.
Exit Strategy Recommendations:
WizCommerce (B2B Consumer): Consider a partial exit through a secondary sale to a
larger investor in the e-commerce or technology sector. This would allow Titan Capital
to realize some returns while maintaining exposure to the company's growth potential.
CharaTechnologies (Cleantech): Pursue a full exit through a trade sale to a strategic
acquirer in the energy or sustainability sector. Given the company's innovative
technology and the growing demand for clean energy solutions, a strategic buyer may
be willing to pay a premium for CharaTechnologies.
Signoff Semiconductors (Semiconductor): Titan Capital could pursue a partial exit via a
secondary sale to a larger venture capital firm once Signoff Semiconductors has scaled
its operations, secured major contracts, and increased revenue. A partial exit during a
Series B or C funding round, once the company scales and attracts larger clients,
would allow Titan Capital to de-risk its position. By retaining a portion of its investment,
Titan can capitalize on Signoff’s long-term growth, as the global demand for custom
semiconductor design services increases, particularly in sectors like IoT, medical
devices, and consumer electronics.
Aroleap (Health and Lifestyle): Consider a partial exit through a secondary sale to a
healthcare or technology investor. This would allow Titan Capital to realize some
returns while maintaining exposure to the growing health-tech market.
DataWeave (SaaS): Pursue a partial exit through a secondary sale to a larger software
or technology investor. This would allow Titan Capital to realize some returns while
retaining a stake in the company's future growth.
Other Considerations
Timing: Monitor market conditions, company performance, and investor interest to
determine the optimal timing for each exit.
Valuation: Conduct thorough valuations to ensure that exit prices are fair and reflect
the companies' true value.
Strategic Fit: Identify potential acquirers or investors that align with the companies'
long-term goals and can provide the necessary resources for continued growth.
Legal and Regulatory Compliance: Ensure that all exit transactions comply with
applicable laws and regulations.
Conclusion:
A mix of partial exits from high-growth potential companies (WizCommerce, DataWeave,
Aroleap, and Signoff Semiconductor) and a full exit from capital-intensive sectors like
Cleantech (CharaTechnologies) allows Titan Capital to de-risk, secure early returns, and
maintain exposure to future growth. This approach maximizes the Distributed Paid-in
Capital (DPI) and boosts Total Value to Paid-in Capital (TVPI), ensuring a balanced portfolio
return for Titan Capital and its Limited Partners.
Strategy for Titan Capital Seed Investments
Platform Success
5-Year Success Plan
In the next 5 years, Titan Capital’s success can be maximized by making multiple small
cheque size bets in large number of companies and devise strategy for portfolio
companies to scale their presence.
Short-Term Exit Focus (Secondary Sales)
Metrics of Success:
Expanded Portfolio: Titan could aim to diversify its investments by making many
small investments across various industries. For example, targeting 150+ seed-stage
startups with small cheque sizes to spread risk.
Enhanced Deal-Making Capabilities: A strong internal team specialized in identifying
early-stage companies and swiftly closing deals in high-potential sectors (e.g., SaaS,
B2B, cleantech).
Global Network Expansion: Expanding its global founder and investor network to
continue sourcing high-quality deals and securing follow-on capital.
Consistent Liquidity Events: Partial exits in 60-80% of companies via secondary
sales would become a hallmark of its strategy, with a strong focus on ensuring
steady returns for LPs.
Rapid Deal-Making Cycle: Titan’s internal team would become highly efficient at
identifying and closing deals within two meetings, further accelerating the pace of
investments and exits.
Potential Key Milestones:
60-80 early-stage investments across diverse sectors.
25-30 successful partial exits generating attractive returns through secondary sales.
Increase DPI by at least 1-1.5x through partial exits while maintaining equity in
promising startups.
10-Year Success Plan
Looking out to 10 years, Titan Capital’s success will be determined by its ability to evolve
its investment model, solidify its position in the ecosystem, and potentially establish itself as
a leading seed investment platform.
Long-Term Value Creation (Strategic Acquisition)
Metrics of Success:
Focused Portfolio: Instead of many small investments, Titan could concentrate on a
select number of high-potential companies (e.g., 30-50 companies), deploying larger
cheque sizes and offering deeper support to build long-term value.
Industry Leaders in Portfolio: Titan could aim for its concentrated portfolio to
include several companies that have become market leaders in their respective
industries.
Value-Added Support: Success would be defined by Titan becoming a key partner
in driving value creation in portfolio companies—providing not just capital but also
strategic advice, hiring, investor connections, and product development support.
IPO or Large Strategic Acquisitions: Success would mean multiple billion-dollar exits
from companies that have gone public or been acquired by global industry leaders,
resulting in high-multiple returns.
Deep Influence on Portfolio Companies: Titan would have developed an ecosystem
where its portfolio companies turn to it not only for capital but for long-term
strategic partnerships, making Titan a highly regarded partner in the startup
ecosystem.
Potential Key Milestones:
20-30 concentrated bets on high-growth companies.
10-12 strategic exits through acquisition by industry leaders.
A TVPI of 2x-3x, indicating that companies have grown significantly in valuation.
Success Framework for Both Strategies
For Short-Term Exit Focus: Success short term horizon will come from Titan’s ability to
scale investments quickly, maintain a steady flow of secondary exits, and deploy capital
effectively across many companies.
For Long-Term Value Creation: Success will hinge on Titan’s ability to strategically
invest in high-growth startups, nurture their development, and eventually position them
for large exits via IPOs or acquisitions.
By aligning its resources, network, and investment strategy with its goals—whether those
are short-term liquidity or long-term value creation—Titan Capital can become a major
player in the seed investment ecosystem over the next decade.
Other Recommendations for Titan Capital
Expanding Investment Horizons: Targeting Tier 2 and Tier 3
Cities
Titan Capital can significantly enhance its investment strategy by focusing on capital-
intensive projects in Tier 2 and Tier 3 cities. These regions offer several compelling
advantages:
Reduced Cost of Capital
Lower Land Costs: Tier 2 and Tier 3 cities generally have lower land prices compared
to Tier 1 cities, reducing the overall capital expenditure for projects.
Government Incentives: Local governments often provide financial incentives, such as
tax breaks, subsidies, and infrastructure support, to attract investments to these
regions.
Tax Benefits
Special Economic Zones (SEZs): Many Tier 2 and Tier 3 cities have SEZs that offer
significant tax benefits to companies operating within them.
Regional Development Incentives: Governments may provide targeted tax incentives to
promote economic development in specific regions.
Government Support
Infrastructure Development: Local governments often invest in infrastructure projects,
such as roads, railways, and utilities, to improve the business environment in Tier 2 and
Tier 3 cities.
Regulatory Support: Governments may provide streamlined regulatory processes and
support for obtaining necessary permits and approvals.
Scouting for Startups in Tier 1 Cities
While focusing on Tier 2 and Tier 3 cities, Titan Capital can also continue to explore
investment opportunities in Tier 1 cities. Startups in these cities often have access to a
larger talent pool, greater market visibility, and stronger networks.
Revenue Generation: Startups in Tier 1 cities can provide potential revenue streams
through partnerships, mergers, or acquisitions.
Synergy Opportunities: Startups in Tier 1 cities may have complementary technologies
or business models that can create synergies with existing portfolio companies.
Key Investment Opportunities in Tier 2 and Tier 3 Cities:
Coimbatore: Engineering expertise, renewable energy potential, low labor costs.
Indore: Clean energy focus, improved logistics infrastructure.
Bhubaneshwar: Emerging tech hub, proximity to steel resources.
Aurangabad: Manufacturing hub with industrial incentives.
Vadodara: Strong industrial base, developing infrastructure.
Nagpur: Central logistics location, green energy incentives.
Special Economic Zones (SEZs):
Mundra SEZ: Largest private multi-product SEZ, excellent port access.
Kandla SEZ: Export-focused, strategic location for raw material imports.
Sri City: Multi-product SEZ with strong logistics and port connectivity.
Land Acquisition and Incentives:
Lowest land costs: Odisha (Bhubaneswar) and Maharashtra (Nagpur).
Cost-efficient logistics: Central and Western India.
Port access: Tamil Nadu and Gujarat.
Subsidies and tax incentives: SEZs in Gujarat, Indore's green energy focus,
Coimbatore's PLI benefits.
By strategically investing in both Tier 2 and Tier 3 cities, Titan Capital can capitalize on the
unique advantages offered by each region. This diversified approach can lead to higher
returns, reduced risk, and a stronger market position.
Specific Sectors for above Investments
Data Centers:
The rapid growth of cloud computing, AI, and IoT has created a surge in demand for data
centers. This presents a significant opportunity for Titan Capital to capitalize on the high-
growth potential of this sector.
High Growth Potential: The global data center market is expected to grow from $59
billion in 2021 to over $143 billion by 2028, with a CAGR of 13%.
Attractive IRR and Exit Opportunities: Average IRR for data center investments ranges
between 15%-20%, with potential exit strategies such as IPOs or strategic acquisitions
by major tech or infrastructure companies.
Focus on Green Infrastructure: Growing interest in sustainability and renewable energy
in data center design presents ESG-compliant investment options.
Health-Tech:
The Indian Health-Tech market is poised for significant growth, driven by factors such as
increasing healthcare expenditure, rising adoption of digital health solutions, and favorable
government policies.
Market Expansion: The Indian Health-Tech market is projected to grow to $150 billion
by 2033, with a CAGR of 39%.
Innovation & Partnerships: Access to cutting-edge genomic sequencing, telemedicine,
and biotechnology provides diverse deal opportunities.
Replacement Cost Strategy: Entry barriers for new competitors are high due to the
capital-intensive nature of Health-Tech. Existing players benefit from established
infrastructure and partnerships.
Energy Transition:
The shift towards renewable energy sources is a global trend, offering significant
investment opportunities in the energy transition sector.
Market & Growth: The global renewable energy market is expected to reach $2 trillion
by 2030, growing at a CAGR of 8.6%.
IRR & Exit Options: Renewable energy projects often offer an IRR of 12%-20%, with exit
strategies like LBOs, strategic M&A, or public offerings becoming prevalent.
Replacement Cost Dynamics: Clean energy projects have high initial capital outlays but
lower operating costs. Established companies are well-positioned to benefit from
replacement cost dynamics.
Business Innovation Titan Capital Externship: To further stimulate innovation and foster
entrepreneurial talent, Titan Capital could launch an externship program. This program
would provide students with the opportunity to gain hands-on experience in venture
capital while simultaneously developing their own entrepreneurial ideas.
Key Features of the Program:
Mentorship and Guidance: Students would be paired with experienced mentors in
Venture Space to receive mentorship and guidance.
Entrepreneurial Development: Participants would be encouraged to develop their
own business ideas and receive support in refining their concepts while solving
complex business problems of portfolio companies.
Funding Opportunities: High-potential ventures could be eligible for funding from
Titan Capital.
By implementing this program, Titan Capital can position itself as a leader in fostering
innovation and attracting and developing top talent.
