BOV Capital has recorded a rare cluster of exits across its first two venture funds, including sales of stakes in Infinity, Cultiv8, and Roar Global, alongside the stock market listing of InsureMe.lk. Yet, despite these outcomes, Prajeeth Balasubramaniam, Managing Partner at BOV Capital, says the firm will not launch a third fund until regulatory clarity improves, citing structural constraints related to taxation, capital mobility, and enforcement.
How BOV Capital’s Funds Performed
BOV Capital manages 2 venture funds with plans for a third. These funds invest in technology startups at early and growth stages. Prajeeth said both funds “typically invested around $500,000 to $1 million”, in return for equity stakes. Regarding performance, he shared that, “Most investments delivered returns of around 2x to 4x. Some companies are around 7x, but we haven’t exited yet.” He noted that returns were concentrated, with about 60% of gains coming from a smaller share of the portfolio. Exit timelines also varied, with the first one occurring about four years after their first fund was launched and one year after the second.
BOV Capital’s first fund was set up in Singapore in 2015 as a Rs.2 billion fund with a focus on scaling Sri Lankan startups. “It was structured with an initial eight-year life, before COVID disrupted timelines and led to an extension,” shared Prajeeth. The capital came from high-net-worth limited partners in the APAC and MENA regions, alongside the founding partners.
Launched in 2017, the second fund, the “Digital Innovation Fund,” in partnership with Dialog Axiata. It deployed Rs.1.6 billion with Dialog Axiata being the lead investor and was managed by BOV Capital. The fund invested primarily in early and growth stage technology startups. About 25% of the fund was reserved for seed stage investments below Rs. 50 million.
Across its first two funds, BOV Capital invested in 16 technology startups, with 5 companies receiving backing from both funds. From this combined portfolio, 4 investments have reached full exits, and 2 investments have reached partial exits, where BOV Capital sold its stakes in these companies. A small number of investments in Fund 02 remain pending exit.
BOV Capital’s first exit was with nCinga Innovations, which was acquired by Zilingo in December 2019 for about $15.5 million. It happened 4 years after the launch of Fund 01 and BOV Capital said the transaction delivered a 3x return with up to Rs.380 million distributed to its limited partners. After Zilingo entered liquidation, nCinga was sold in 2023 to Buyogo AG and continues to operate as an enterprise software provider. Another big exit was in January 2022, when Linear Squared, a tech company specialising in AI, was acquired by Algonomy. Financial terms were not disclosed, though BOV Capital fully exited its position as part of the transaction.
The most recent of these exits were IFINITY, a banking system integrator, Cultiv8, an agri-tech company, and Roar Global, an advertising agency. Alongside these, InsureMe.lk, an insurance broker, was listed on the Colombo Stock Exchange’s Empower Board on December 1st 2025. Prajeeth elaborated that Roar’s exit applied to Fund 1, while Fund 2 continues to hold a stake in it.
Several holdings remain in the portfolio. “Under Fund 1, we’re working towards exits in OMAK Technologies [a provider of point-of-sales systems for restaurants and retailers] and ZigZag [an online fashion brand]. With Fund 2, the remaining exit candidates are Digital Health [operator of the Doc990 digital health platform] and Roar Global,” shared Prajeeth. Other active holdings include iConic Devices, an industrial electronics manufacturer, and Scybers, a cybersecurity firm.
However, a small number of investments did not succeed. Prajeeth said one company, Headstart, which provided digital learning solutions, failed. Internal tracking also shows 99RetailStreet, an eCommerce platform, and Simplex, a logistics provider, as no longer operating.
Why BOV Capital’s Next Fund Is on Hold
Despite its recent exits, BOV Capital paused plans to launch a third fund, “Until there is clarity on the regulatory side,” stated Prajeeth. He refers to unresolved issues around how venture funds are structured, taxed, and allowed to move capital. “The government is trying to address these issues,” he acknowledges, “But progress is slow,” making it difficult for the firm to raise its next fund locally.
Prajeeth Balasubramaniam, Managing Partner at BOV Capital
Prajeeth observes, “Banks, corporates, and family offices could all be part of this ecosystem. It’s not that people don’t want to invest. But once they start looking at how the tax works and how the vehicle is treated, they step back. They also want to see a clear exit pathway with a good ROI. In a market that has so many constraints and not great perception, there should be many incentives given to local investors in order to unleash local capital. This is the only way FDI’s can follow when there is a local lead.”
A key reason is the absence of a legal structure for venture capital. “A venture fund is treated like a normal company here, which doesn’t work for this asset class. The startup pays tax, the fund pays tax, and then the investor is taxed again,” he explains. Hence, local funds are less competitive compared to markets like India and Singapore, with structures that avoid multiple taxation. “Despite all the hurdles and the lack of local participation, BOV Capital has shown some clear traction which has tremendously helped enhance the startup ecosystem,” said Prajeeth, adding that steps are now being taken to address these issues.
A government-backed fund-of-funds was announced late last year, an idea he noted had been discussed as early as 2015, alongside proposals for tax pass-through treatment. He described these initiatives as positive and long overdue, pointing to India as an example where a fund-of-funds helped attract private capital by reducing risk for investors. He also recognised the role played by the ICTA and the Digital Ministry in re-engaging with these reforms. However, he cautioned that meaningful impact will depend on coordination across institutions, including the Ministry of Finance, the Central Bank, and Parliament.
As startups scale, however, they often need to move capital overseas to fund expansion, acquisitions, or market entry. But outward investment limits, combined with Central Bank approvals, constrain that process. Prajeeth said approvals “can take six months, sometimes years. By the time it comes through, the opportunity is gone.” He added that, “For a $10 million fund with a 10-year life and a two- to three-year investment period, it becomes almost impossible to deploy the entire capital.” This forces startups to set up complex offshore structures simply to operate at speed, leaving local investors stuck in limbo and unable to move capital when it matters.
Even international funds investing in local startups face similar hurdles. “Foreign investors are more comfortable routing capital through Singapore or Dubai,” Prajeeth said, adding that the choice is usually practical rather than strategic. “It’s just easier for them.”
He also stressed the need for strong legal enforcement and investor protection. “Failure is part of venture capital,” Prajeeth said. But what unsettles investors is a lack of enforceable rules and, as he put it, “not being able to get their capital out.” In markets such as Singapore, he noted, founders “can’t raise capital and disappear without consequences.” But locally, weak enforcement creates uncertainty. This makes investors hesitant, regardless of risk appetite.
In closing, Prajeeth states Sri Lanka offers limited exit options, pointing to the lack of strategic buyers and the rarity of public listings. Local buyers, he added, often undervalue startups compared with foreign acquirers. Citing nCinga, he said, “the local offers were nowhere close to what we saw internationally,” attributing the gap to deeper capital pools overseas. With stronger local capital markets, he added, outcomes could look different.