Seed-stage funds clock gains; IT firms' ‘self-funded’ deals

Happy Wednesday! India-focused early-stage funds bagged significant returns in 2025. This and more in today's ETtech Morning Dispatch.

Also in the letter:
■ ETtech Done Deals
■ Oyo's third IPO attempt
■ ET Money's pivot

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Blockbuster listings such as Lenskart and Meesho, along with eye-catching secondary transactions, may have dominated the headlines this year. But away from the spotlight, India's early-stage investors quietly locked in some of their biggest paydays yet.

Raking in capital: India-focused seed and early-stage funds are emerging as some of the year's biggest winners, benefiting from both IPO momentum and a maturing secondary market.

• Kae Capital has already logged a more than 2x return on its $25 million investment in logistics startup Porter.
• Mobility-focused fund AdvantEdge clocked a 30x return through a partial sale of its Rapido stake to Prosus. The fund first backed Rapido in 2016.
• VenturEast secured a 10x return on its investment in the customer engagement SaaS firm MoEngage through a secondary deal.
• Early-stage investor 3one4 Capital has also booked a series of partial and full exits across its portfolio companies, including Dhan, Kuku FM, and Darwinbox.

Going beyond IPOs: Early investors no longer wait a decade for public listings to recover their capital. Secondary transactions, such as selling stakes to incoming late-stage investors, have become a credible, repeatable exit route.

VenturEast partner Vinay Rao said flexibility on exit timing has become essential. “MoEngage is clearly on the path to an IPO, possibly in a couple of years, but we've been invested long enough and needed liquidity, so we chose to do a secondary,” he said.

Also Read: 2025 Year in Review | Who's in, who's out: the biggest executive moves in India's tech & startup sector

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IT service providers are rethinking how they price, package and protect revenue as artificial intelligence compresses project timelines and trims team sizes.

Driving the news:

• As more work shifts to AI-enabled delivery, analysts say new and renewed contracts are being marked down by 20-30%.
• Faster execution and leaner teams are good news for clients but threaten to chip away at top lines.
• To counter this, service providers are recycling AI-driven productivity gains into new layers of work, rather than letting them show up as outright fee cuts.

For instance, larger players like Wipro and Cognizant are setting the pace.

• Wipro's recent engagement with Dutch telco Odido follows a model where productivity-led savings are redirected into continuous digital transformation programmes.
• Cognizant is taking a similar tack. Chief executive Ravi Kumar S has said clients are using these savings to build what he calls "agentic capital."

Yes, and: These self-funded structures are fast becoming a retention tool. They allow vendors to offer a clear cost-benefit upfront while anchoring long-term transformation roadmaps.

“It is a new way of enhancing the overall value proposition by using AI to cut operational costs and reinvest those savings into transformation,” said Shobhit Jain, head of enterprise technology & services investment banking at Avendus Capital.

Also Read: IT hiring rebounds in 2025, thanks to India's GCC boom

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Supam Maheshwari, CEO, FirstCry

FirstCry parent Brainbees Solutions said its subsidiary, Swara Baby Products, will acquire a 100% stake in Pune-based hygiene products maker KA Enterprises Hygiene in a share-swap deal valued at Rs 57.74 crore.

Deal details:

• Swara Baby will issue fresh equity shares to KA Hygiene's existing shareholders.
• As a result, Brainbees' direct holding in Swara Baby will dilute from 87.29% to 75.92%.
• KA Hygiene will become a wholly owned subsidiary of Swara Baby and a step-down subsidiary of Brainbees Solutions.
• After the share swap, Brainbees will hold 75.92% in KA Hygiene.

KA Hygiene, which manufactures sanitary pads and diapers, reported a turnover of Rs 84.01 crore in FY25.



Aerospace and defence electronics company CoreEL Technologies said it has raised $30 million, led by ValueQuest, with participation from existing investor 360 ONE Asset.

Fund use: The fresh capital will be used to scale manufacturing, strengthen R&D and product engineering, and support participation in large and complex aerospace and defence programmes in India and overseas.



Electric vehicle (EV) and industrial motor startup Naxatra Labs has raised $3 million in funding, led by Rainmatter, the venture investment arm of Zerodha. The deeptech startup develops end-to-end motor tech for EVs and industrial applications, from electromagnetic design and validation to final production.

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Ritesh Agarwal, CEO, Oyo

Oyo's third attempt at an IPO: Oyo's parent, Prism, has received shareholders' approval to raise to Rs 6,650 crore through a fresh issue of equity shares as part of its proposed initial public offering (IPO) at an Extraordinary General Meeting (EGM) held on December 20, 2025.

ET Money's pivot: ET Money, one of the early fintechs to disrupt the mutual fund distribution market with its direct, or free, offerings, has moved to a subscription model for new investors.

HCLSoftware to acquire Jaspersoft for $240 million: HCLSoftware, the software business division of IT services company HCLTech, intends to acquire Jaspersoft, the business unit of Cloud Software Group, for $240 million in cash, the company has announced.

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