Tiger Global-backed logistics services provider Porter turned into a unicorn after closing a new friends and family round in which investors purchased shares from the employee stock ownership plan (ESOP) pool at a $1 billion valuation.
A privately held business valued at $1 billion or more is known as a unicorn. In India, there are roughly 106 unicorns. After B2B SaaS startup Perfios and AI startup Krutrim, Porter is the third unicorn of this Year.
Logistics Services Provider Porter Doubles Valuation with Fresh Investment
According to a source, 15-20 individuals invested Rs 25 crore in Porter in a recent round of funding. This investment has doubled Porter’s valuation from $500 million in 2021. Since its start in 2014, Porter has raised about $150 million from investors like Tiger Global, Peak XV Partners, Kae Capital, the Mahindra Group, and Lightrock.
This round is significant because it’s a secondary transaction that happened at a premium, not a discount. In secondary deals, existing shareholders sell shares to other investors, so the cash doesn’t go to the company directly.
Porter Defies Norms with $1 Billion Valuation
Usually, when shares change hands in a secondary deal, investors value the company at a discount of 25-30% from its last primary valuation. This could have meant Porter being valued below $500 million. However, Porter’s leadership decided on a $1 billion valuation.
The company’s strong revenue growth supports this valuation jump. In the fiscal year 2023, Porter’s revenue more than doubled to Rs 1,754 crore from Rs 848 crore in FY22. This increase likely justifies the higher valuation.
Porter has liquidated its ESOP pool and received a premium over its previous valuation on previous friends and family rounds. Similar to the present round, the corporation sold friends and family shares from its ESOP pool around Rs 7-8 crore in the January–March quarter of 2023, valued at $700 million, according to sources.
Recent Valuation Boost Shows Confidence in Growth
The recent funding round reflects the leadership’s belief in Porter’s potential for growth. According to a source, Porter’s annual recurring revenue (ARR) has increased 3-4 times since the last ESOP liquidation event, justifying the consecutive valuation hikes.
Founded in 2014 by Pranav Goel, Uttam Digga, and Vikas Choudhary, Porter specializes in optimizing last-mile delivery for businesses by offering on-demand light commercial vehicles (LCVs). To broaden its revenue streams, it’s expanding its services, including an intra-city courier service on two-wheelers.
An increase in valuation during ESOP liquidation events is good news for Porter’s employees, who receive substantial rewards for their contributions to the company’s growth. In recent years, ESOPs have become a valuable tool for attracting top talent.
According to Qapita, an equity management platform, between 2021 and 2023, ESOP cashouts resulted in $1.46 billion of wealth for startup employees. ESOPs have transformed into valuable tools for employees, marking a shift from their previous low value. The perception of ESOPs has changed significantly due to a wave of new-age IPOs, including Zomato, Paytm, and Delhivery.
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