NEW DELHI/BENGALURU: WaterBridge Ventures, Omidyar Network and Whiteboard Capital are among a clutch of smaller venture capital (VC) firms that are set to either clock profitable cash exits or witness significant up-rounds, or uptick in valuations, across some of their portfolio companies, multiple people in the know of developments have said.This comes at a time when the broader venture capital industry has sharply trimmed investments amid the economic crisis induced by the Covid-19 pandemic.Quite a few of these firms are outside the blue-chip venture capital world, comprising the likes of Sequoia Capital and Accel Partners, and have typically raised less than $50 million in their first funds.The trend is indicative of an evolving early-stage investing industry in India, mirroring what has happened across Silicon Valley and China, people tracking the sector said.WaterBridge, for instance, is likely to clock a potentially handsome exit from ed-tech startup Doubtnut, as reported by ET on July 5, with a return of investments of at least half of its $30-million first fund from the transaction.Another WaterBridge portfolio company, B2B commerce startup Bijnis, has raised close to Rs 70 crore in a round led by Matrix Partners and Sequoia Capital.For the industry at large, transactions such as Walmart’s acquisition of Flipkart and Jio Platforms’ recent more than $20 billion capital-raising has opened up more opportunities, said Manish Kheterpal, founder and managing partner of WaterBridge Ventures, without commenting on specific deals.“One is also seeing separation of wheat from chaff in the fund management industry—funds with alpha in their differentiated strategy, smarter portfolios and experience of navigating exits are seeing exits and cash-on-cash returns early in their harvesting period through active M&A,” he said.Kheterpal’s four-year-old fund has already exited two other investments from its maiden investment vehicle — ed-tech major Unacademy in late 2018 and auto-tech platform BlueJack in February.“Today, Limited Partners (LPs), or sponsors in funds, are actually asking for cash exits from India, and not just paper valuations,” said Rutvik Doshi, Partner at Inventus Capital Partners, which in January recorded cash exits worth Rs 230 crore from three companies, including a partial sale in online financial marketplace PolicyBazaar, as well as full exits in jobs portal AasaanJobs and ed-tech platform eDreams.Sources in the know told ET that Omidyar is likely to cash out on two ed-tech deals in the next few months, including Doubtnut and WhiteHat Jr — both of which are in line to be acquired by ed-tech unicorn Byju's — after having clocked three exits in 2019.Omidyar did not respond to ET’s queries sent till press time Tuesday.“A few years back, when smaller sized funds (sub-$50 million) launched, large LPs questioned the portfolio construction, and their ability to cash big on the winners. But some have been able to prove us wrong with their high-quality deal flow and faster exits,” an LP at a top-tier investment fund said. “Their niche also acts as a credible deal flow pipeline for larger funds, instead of competition. It’s a sweet spot,” the LP added. 77099269Record up-rounds Whiteboard Capital and Fireside Ventures have also seen a number of their portfolio firms record up-rounds in the last six months, according to publicly available information.For Whiteboard, this includes companies like Generico, Cred, Dealshare and KhataBook, while Fireside portfolio companies such as MamaEarth and Yogabar have witnessed bigger rounds in the last six months.“The opportunity to work with a small set of founders at the ideation stage to build businesses is an interesting niche where funds like ours provide an added advantage with our network,experience and time thereby also preparing them for the larger fund raises,” Anshu Prasher, Partner, Whiteboard told ET.These exits are significant since smaller VCs were always in competition with the larger firms to source deals and have found it hard to get the right ownership to make outsized returns.For instance, Gurgaon-based YourNest Venture Capital, which focuses primarily on the deep-tech space, last month sold its entire stake in conversational artificial intelligence technology startup Uniphore, earning about Rs 55 crore. For the early-stage fund, this was a shade less than seven times its initial investment, returning more than half of its fund to investors.“We are in the process of executing another exit from Fund-I… At the end of the day, the investment focus is sharp, and we have the dry powder, which helps us to zero down on opportunities fairly quickly, and make decisions very fast,” said Girish Shivani, executive director of YourNest.