India-focused messaging startup Gupshup raises $240 million for share buy-back

India-focused messaging startup Gupshup raises 0 million for share buy-back

By Jane Lanhee Lee(Reuters) – Gupshup, a Silicon Valley messaging startup with a deal with India, on Wednesday mentioned it raised $240 million from Tiger World Administration and others to purchase again shares forward of a attainable IPO subsequent 12 months.Whereas enterprise capital investments are historically used for hiring extra engineers or increasing gross sales and advertising, buy-back offers enable buyers in a startup to comprehend their funding earlier than an IPO.A flood of funds at a time when startups keep non-public for for much longer has led to extra buy-back offers on the non-public market, mentioned Ed Zimmerman, a lawyer at Lowenstein Sandler who teaches enterprise capital at Columbia College’s enterprise college, referring to the market generally.Gupshup raised $100 million in April from Tiger World and was valued at $1.4 billion. Tiger World has emerged as the largest funder of enterprise offers this 12 months.Gupshup, which implies chit chat in Hindi, permits companies to speak with clients via present chat channels like textual content messaging, mentioned CEO Beerud Sheth.”We wish to construct relationships with these giant buyers as a result of they may also help us in a future IPO and for our progress. However … taking an excessive amount of cash will be dilutive,” mentioned Sheth concerning the buy-back. As Gupshup has been round for nicely over a decade, Sheth mentioned there was even an investor who handed away, making the buy-back mandatory.The buy-back may even enable workers to money out, a problem for a lot of startups as delayed IPOs have stored many founders and workers wealthy solely on paper.That is helped create an energetic marketplace for these shares on the non-public market, mentioned Paul Maguire, managing accomplice at Iron Edge VC, which arrange funds to put money into startup shares. Whether or not on the general public or non-public market, buy-back offers have been typically a giant endorsement of an organization, he mentioned, with out information of this deal.(Reporting By Jane Lanhee Lee; modifying by Richard Pullin)

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