Nima Namdari talked about a Sudden Move, “Hamrahe Aval” Acquires 40% of “Digikala” Shares While Sarava Exits
In a surprising and unexpected move, it is reported that even the board members of Sarava were unaware, but “Hamrahe Aval” has successfully acquired 40% of the shares of “Digikala.” Although this major acquisition is not yet finalized and remains at the resolution stage, this decision means that Sarava will exit Digikala. The news of Sarava’s exit from Digikala and the transfer of this investor’s shares to Hamrahe Aval has become the most significant news in the startup ecosystem and private sector economy.
Previously, Digikala was under pressure to force its foreign shareholders to sell their 32% stake, but it seems this pressure has led to Sarava’s exit from the company. As a result, Hamrahe Aval will gain two seats on Digikala’s board, and Sarava will exit the company after 12 years. Reporters discussed the reasons behind Sarava’s exit and the sale of shares to Hamrahe Aval with Nima Namdari, an expert in this field.
Has Sarava’s Exit from Digikala Marked the First Successful Exit for an Investor in Startups? It is said that with Sarava’s exit from Digikala, the first successful exit of an investor from a startup has been achieved. Although there have been previous exits, the profits were not significant enough to be noteworthy. Do you consider the exit of Digikala’s main investor, Sarava, a success?
To address this question, we first need to clarify something. An exit from a startup can occur in two ways: The first is through an IPO, where an investor, who initially invested in the company, successfully sells its shares on the stock market after the startup’s growth. The second method is through mergers and acquisitions, where a startup grows and a larger company comes in and buys its shares, taking over the company.
The shares are usually acquired from the original investor. This type of investment is typically made by VC firms or what is commonly known as venture capital. The investment cycle usually involves early-stage investment in a startup, purchasing shares with the hope that the startup will grow rapidly, allowing the investor to exit with a substantial profit. VCs usually invest in a portfolio of startups, betting that one or two out of many will succeed, even though most startups fail. If one or two do succeed, the returns can be significant, covering the losses from other investments.
Now, regarding Sarava: if we want to assess Sarava’s performance in this exit, we need to consider the overall return on their investments in various startups. Sarava is the first venture capital fund in Iran, operating for 14 years, with its investment in Digikala starting about 12 years ago. Despite having made many investments over the years, Sarava has had very few successful exits, with none as significant as Digikala.
For example, they recently sold AloPeyk, but the return on that investment is unclear. Naturally, many of Sarava’s investments over the years have failed, and now they need to compensate for those losses with a few successful investments. The key question is whether the return on the Digikala exit is sufficient to cover the losses from their failed investments.
Sarava entered Digikala in 2012, during which time they faced investment risks, market volatility, inflation, and other costs. Do you think the profit justifies the costs?
I don’t think Sarava’s exit from Digikala was unsuccessful. Some have claimed that Sarava’s investment grew by 1000% during this period, considering inflation. This translates to an annual average return of about 30%, while the average annual inflation rate has been higher than 30%. This suggests that the return is not extraordinary. Not only was the investment in Digikala not highly successful, but Sarava also did not achieve a good return overall to cover its portfolio. The critical question is whether Sarava had any other option. It seems they didn’t.
Sarava has been struggling for various reasons, and startups like Digikala and others where Sarava invested faced restrictions. It was rumored that the reason companies like Digikala, Alibaba, and Cafe Bazaar were not allowed to go public was due to Sarava’s involvement. As such, Sarava had no choice but to exit. With the option of a public offering closed, the only remaining option was acquisition.
When such agreements happen, the stronger party (in terms of proximity to the government) often takes over and manages the company, similar to what happened with Iran Khodro or Golrang’s acquisition of Tapsi, where they replaced the CEO and changed the infrastructure. Given that Digikala has set conditions for Hamrahe Aval, such as not altering the structure and keeping operational decisions with the current management, do you think a good deal was made?
Regarding the investment terms and conditions, since we don’t have access to the contract, it’s hard to judge. However, from the investor’s perspective, when they buy shares, they don’t intend to shut down the business. They have growth plans, as seen with Golrang, which has been actively working after acquiring Tapsi. However, the concern is valid: do these companies have the capacity to utilize startups effectively?
Startups have a unique culture and internal dynamics. They lack the bureaucratic structures and complexities of traditional large companies. Employees in startups typically have different cultural and workplace expectations. If companies like Golrang or Hamrah Aval are not familiar with these nuances, they could face significant challenges.
Another reality is that startup founders didn’t create these startups to remain in them forever. They are entrepreneurs who enjoy building things. Globally, entrepreneurs often start multiple startups. For instance, Elon Musk started with one company and then moved on to others. Jeff Bezos started with Amazon but is now focusing on space ventures with another company. The problem in Iran is that founders like the Mohammadi brothers, Milad Monshipour, and Hesam Armandehi get stuck in their startups.
They can’t exit, sell, or go public, which eventually makes them mere employees of their companies, reducing their efficiency and motivation. If managers cling to their startups indefinitely, it’s not a good thing. So, it’s possible that Monshipour, after exiting Tapsi, is happy because he now has the resources to start a new venture. Elon Musk’s many achievements over the years are due to his successful exit from PayPal.
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