Prosus-Jar deal comes unstuck due to differences in valuation

Jar, Prosus, SIG, and Arkam Ventures did not reply to Moneycontrol’s queries.

No secondaries

Apart from a valuation mismatch, the founders of Jar – Nishchay Ag and Misbah Ashraf – wanted to sell some of their shares in the company through secondary transactions, a move the incoming investors were not in alignment with, at least until they got an exit first.

“That was another key reason why deal negotiations are stuck. A small portion through secondaries should have been okay, especially in Jar’s case where the founders own around 40 percent,” a third person aware of the developments told Moneycontrol.

However, “the investors were not okay with the founders diluting their stake at the Series C stage as they thought it would reduce motivation,” the person added.

Founders taking secondaries has been a contentious topic in the Indian startup ecosystem, as some founders use it to accumulate personal wealth. While some, like Freshworks’ Girish Mathrubootham have advocated founders selling shares to take care of personal expenses and focus more freely on building their companies, others have not supported the move.

Additionally, Prosus’ reluctance here stems from its history with founders who have sold shares in secondary markets. The founders of Byju’s and the Good Glamm Group, two crisis-hit startups from Prosus’ India portfolio, diluted stakes in their respective firms via secondary transactions on multiple occasions.

Jar looks to IPO

While its deal with investors hangs by a thread, Jar is also preparing to engage with bankers and explore a public market debut sometime in 2026 and is not keen on raising funds now, Moneycontrol has learnt.

“Unless the investors increase the valuation they’re offering, a deal is off the table,” one of the persons cited above said.

The investors and Jar are scheduled to meet later this week, but that is only so the talks end on an amicable note, as there is no deal happening anymore, another source said.

It is likely that Jar is also asking for a higher valuation because the company has turned profitable since deal negotiations first began and now the management believes it can be rewarded better, especially by public market investors.

On January 30, Jar’s co-founder and CEO Nishchay Ag posted on X (formerly Twitter) that Jar “...became profitable…” but did not provide specific numbers. A month before that, around the end of 2024, he posted on social media that the company went from Rs 23 crore in annualised revenue run rate (ARR) in December 2023 to Rs 270 crore ARR in December 2024 as it expanded revenue streams. 

To be sure, Jar is yet to officially file its full-year financials for FY25. It is, however, likely that the company remains loss-making for the entire fiscal year. In FY24, its revenues jumped around 5.5X on a year-on-year (YoY) basis to Rs 50 crore and losses narrowed 16 percent to Rs 104 crore, regulatory filings showed.