PE investors make a beeline for start-ups to generate higher returns

Traditionally, they invested only in firms with cash flow but these have not generated great returns; with tech disruption, trend set to continue

Last month, private equity (PE) firm WestBridge Capital led a $54.6 million Rs 391 crore Series-B funding in Roppen Transportation Services, which runs motorcycle pooling and taxi start-up Rapido. 

WestBridge has also backed start-ups such as Design Café, IndiaMart and IndiaQube. And, it is not alone. On Monday, Canada Pension Plan Investment Board (CPPIB) invested $115 million in logistics provider Delhivery. A business daily reported that PE firm Kedaara Capital could lead a new funding round in eyewear chain Lenskart that could value the company at $1 billion. 

Traditionally, PE firms in India or abroad only backed companies with cash flow. Globally,