Elevation Capital mulls rare seed-to-IPO crossover in Urban Company

Elevation Capital, which wrote the first seed cheque for Urban Company a decade ago, is likely to participate in the upcoming IPO of the company as a buyer, through its newly created $400-million late-stage vehicle Elevation Holdings, led by managing partner Ravi Adusumalli.Elevation Holdings has recently purchased shares in the pre-IPO secondary round along with other buyers such as SBI Mutual Fund, private equity firms Permira and Prosus, together investing about $55-60 million, one of the people said. The shares were purchased from early backers including Accel and Tiger Global. Elevation Capital’s venture arm is selling a small portion in the IPO, while retaining most of its position, the sources added.Elevation Holdings, with Adusumalli as general partner, has been positioned to invest in companies within three years of going public. Adusumalli has been on Urban Company’s board since 2015, when Elevation Capital signed its seed term sheet within a month of the firm’s launch.Industry trackers said it is uncommon for a seed-stage venture firm to re-enter the cap table of the same company at IPO. “It’s very early days for the ecosystem to think about this kind of crossover play,” one investor told TOI, adding that public market managers often argue they can buy such stocks directly.The person pointed out that the fee structures, liquidity and carry models of public and private funds differ significantly, making it challenging to convince investors to back hybrid strategies. “An insurance company may be comfortable doing a public fund, but they may or may not be comfortable doing a venture capital fund. Maybe they’ll go back to the same investor and say, ‘you enjoyed the zero-to-one journey, now there’s a one-to-end, we’ve got new fee terms for you’,” the person said.Urban Company filed for a Rs 1,900-crore IPO in April, including a Rs 429-crore primary issue and Rs 1,471 crore via an offer for sale. Accel India, Tiger Global, Elevation Capital and Bessemer Venture Partners are listed among the selling shareholders in the draft prospectus.The Bengaluru-based venture capital firm has launched Elevation Holdings to back companies that are within three years of going public with cheque sizes of $20-50 million. The fund has already deployed capital into IPO-bound used-car marketplace Spinny, which recently expanded its Series F to $170 million at a flat $1.5-1.7 billion valuation.Elevation Capital and Urban Company did not comment when contacted.