Iron Pillar is on track to exit Vyome Therapeutics following a NASDAQ reverse merger, establishing proof-of-concept for biotech in a US-India tech corridor long dominated by IT.

The developer of clinical-stage immuno-inflammatory and rare disease treatments, now known as Vyome Holdings, made its public debut on 15 August following a merger with medical devices maker ReShape Lifesciences.

As of April, Kalaari Capital Partners was the largest external shareholder with 19.1%, while Iron Pillar had 7.5%. Other investors include the Mariwala family’s Sharrp Ventures and Manipal Group chairman Ranjan Pai. Some, including Iron Pillar, remain subject to lock-up agreements.

“The corridor has not really tapped into the overall [biotech or life sciences] potential that exists,” said Mohanjit Jolly, a co-founder and partner at Iron Pillar, who sits on the Vyome board.

IT companies have historically relied on India for its skilled labour at competitive costs, while headquartering in the US to be close to customers, gain better brand perception, and tap a wider investor base. Vyome aims to replicate this formula in biotech through a combination of partnerships, licensing relationships, and joint ventures, Jolly explained.

Recent traction includes a memorandum of understanding with Embryyo, an artificial intelligence-enabled med-tech studio based in Pune, India, to jointly develop and market medical devices. Vyome and Embryyo will host a global smart devices forum for companies along the US-India corridor.

Vyome also conducts R&D across both markets. Its lead product candidate, a topical antibiotic gel for inflammatory acne called VB-1953, has been granted clearance for clinical trials by the US Food & Drug Administration (FDA).

The company, domiciled in Cambridge, Massachusetts, was established by Shiladitya Sengupta and Venkar Nelabhotla. Sengupta co-founded US-based Alyssum Therapeutics, which specialises in B-cell immunotherapy for cancer and autoimmune diseases. Nelabhotla, whose experience includes various stints at healthcare and pharma companies, serves as CEO.

For Iron Pillar, biotech is “a very atypical bet,” added Jolly. “We tend to be two-thirds in enterprise, and one-third in consumer tech. But in this particular case, we made an exceptional bet on a serial entrepreneur.”

Jolly’s relationship with Vyome traces back to his time at Silicon Valley VC firm Draper Fisher Jurvetson (DFJ), which considered leading the start-up’s Series A round in 2012. Kalaari ultimately played that role. After starting Iron Pillar, he saw another chance to go in, leading a USD 22m round in late 2018 with support from Kalaari, Perceptive Advisors, and Romulus Capital.

The NASDAQ listing was the first of two public debuts for Iron Pillar portfolio companies this month, with Bluestone Jewellery & Lifestyle completing an Indian IPO on 19 August.

The company raised INR 15.4bn (USD 175.7m) through the sale of 29.8 million shares at INR 517 apiece. Iron Pillar made a partial exit, securing proceeds of INR 671.1m. It previously sold INR 1.02bn worth of shares to asset manager 360 One in February 2024.

Iron Pillar, which first invested in Bluestone in 2016 at an undisclosed valuation, still holds 2.71% stake in the company. This was worth INR 2.26bn based on the 26 August closing price of INR 543.

“I’m not sure if this is what we would have underwritten when we first got the fund going,” said Jolly. “Underwriting IPOs eight or 10 years ago, when the market for IPOs was simply not there – you can probably imagine that it was not something that was considered down the fairway from an exit mechanism standpoint.”

Iron Pillar now claims five exits from its debut fund, which closed on USD 135m in 2020 and has invested in eight companies, according to Jolly. The other three are trade sales, including enterprise software provider NowFloats, which was acquired by Reliance Industries in 2019.

The growth-stage technology investor is currently deploying its second fund, which has a corpus of USD 129m. Investments include cloud services company CoreStack, cloud kitchen operator Curefoods, and enterprise automation providers Ushur and Jiffy.ai.

“Seven years after our final close of Fund I, the focus for us is very much on DPI [distribution to paid-in]. We’re approaching a 1x DPI, which is a psychological milestone,” he added. “We are, of course, playing for the upside [beyond 1x] over the coming years.”