That's true, but I wonder why these late-stage investors are investing at these valuations with complete disregard for capital efficiency.
My guess is, late stage investors are bringing money from a different class of LPs, who aren’t looking for asset classes that grow 20x.
Leave 20X.
My concern is that some of these can't even retain their valuations (Oyo and Byju are valued below their total funding amounts already).
You are right and I am simply putting myself in the shoes of the late stage investors. Perhaps they have been sold a story the drives confidence in a 2X return. When the story doesn’t hold up, there isn’t much of a multiples buffer to prevent losing money.
One could argue that absent a MnA ecosystem, investors only have a handful of opportunities to multiply their investment. It leads to simple handing-off to next round investors as the one and perhaps only opportunity to get returns on the funds.
Only recently has the ecosystem understood the potential for IPO in India as a potential for exit.