ILLUSTRATION: SHUTTERSTOCK
HERE IS a thought experiment. It is 2018. eSewa is three years old, has 2 million users and is growing at 60 percent year on year. The Chaudhary Group, which runs CG Corp Global across 32 countries with revenues in the hundreds of billions of rupees, has a digital strategy team exploring what the group should do in payments and financial technology.
The obvious move: buy eSewa, integrate it into the group’s consumer ecosystem (hospitality, food, retail) and let it grow under CG’s brand and balance sheet. The price in 2018 would have been a fraction of what it is now. eSewa’s parent company F1Soft International is today valued at some $200 million. The Chaudhary Group did not buy it. Nobody in Nepal’s conglomerate tier bought it. eSewa raised from institutional investors, built its own ecosystem and became Nepal’s dominant payment platform. CG Corp eventually launched its own digital products. They have not caught up.
This non-acquisition is not an isolated case. Pathao raised from Tiger Global. Foodmandu raised from Dolma Impact Fund and Team Ventures. Khalti raised from Ncell and others. None of the major Nepali startups were acquired or strategically invested in by the Chaudhary Group, the Golchha Organisation, the Saurabh Group or any of the other family conglomerates that collectively dominate Nepal’s formal private sector.
This is the corporate venture gap; and it is costing Nepal’s startups their most natural source of growth capital while costing the conglomerates their best opportunity to participate in the digital transition happening inside their existing customer base.
Why doesn’t it happen? Start with culture. Nepal’s family conglomerates are built around a certain operating philosophy: the family controls everything, financial information stays within the bloodline and governance is informal and relationship-based. A VC-backed startup has the opposite of this: clean cap tables, institutional investors with board seats and information rights, audited financials prepared to international standards, founders with equity who won’t disappear if they disagree with the new owner.
When a Chaudhary Group entity acquires a startup, it is not just buying a product: it is importing a governance structure that is incompatible with how the group has always run its affairs. The due diligence that brings the startup’s cap table into the conglomerate’s books creates transparency the family has spent decades avoiding. That is a big problem.
The valuation problem sits alongside the governance one. Conglomerates in Nepal are accustomed to buying physical assets: land, factories, hotel buildings as well as inventory. They price acquisitions on asset multiples or earnings multiples; the question is “what does this asset produce and what is that production worth at a reasonable multiple?”
Software businesses are priced differently: on revenue multiples, on user base, on growth trajectory, on the defensibility of the market position. A startup losing money but growing at 80 percent annually expects to be valued on its future; a conglomerate comfortable paying 5 to 8 times EBITDA for a profitable manufacturing plant will not willingly pay 15 times ARR for a company with no profits. Neither side is wrong about how to value their respective business. They just cannot agree on a price.
Then there is what happens to the startup after the acquisition. This is the quietest reason and it is the one that founders talk about honestly when they are not on the record. Nepal’s legacy conglomerates are not known for preserving the cultures of companies they acquire. They bring in family loyalists. They restructure reporting lines.
The founder, who built the company and holds the institutional knowledge of why users chose the product, is given a title and a larger office and is effectively sidelined within twelve months. The engineering team, which had joined partly for the startup’s culture and equity upside, realises the upside is gone and the culture has changed, and leaves. The product stagnates. The acquisition was a mistake by every measure except that it now appears on the conglomerate’s organogram.
Founders know this. They talk about it in Kathmandu’s small, well-connected startup community. The upshot is that Nepal’s best startups are actively resistant to domestic conglomerate investment even when the capital would be useful, because they have watched the pattern play out with smaller acquisitions and do not want to repeat it at scale. A founder who has built something to Series B can find money from Dolma or from a regional VC faster than from a domestic conglomerate, and the international capital comes without the governance risk.
The solution exists and is not exotic: a dedicated corporate venture capital arm, operating at arm’s length from the core conglomerate, with its own investment committee, its own governance standards and a clear mandate to take minority stakes without operational control. Reliance Industries in India runs Jio Ventures this way. Tata has its own innovation fund.
Neither of those programmes required the founding family to give up operational control of the core business; they just required the discipline to let a portfolio company be run by its founders. Nepal’s conglomerates have built empires through exactly that kind of discipline applied to physical assets. Applying it to software is a different mental model. It is also the failure that is leaving the most valuable segment of Nepal’s emerging economy to be financed by foreigners while the domestic capital that could accelerate it watches from the side. ■
