Ahead of its potential IPO in 2022, India-focussed Silicon Valley messaging startup Gupshup said, it had raised $240 million in a funding round that was led by Tiger Global Management and others.

While investment from venture capitalists is typically used for hiring engineers or expanding sales and marketing, buy-back deals allow investors, in the startup, to realize their investment before an IPO.

According to Ed Zimmerman, a lawyer at Lowenstein Sandler who teaches venture capital at Columbia University’s business school, a flood of funds in the market comes at a time when startups prefer to stay private for longer durations, leading to more buy-back deals on the private market.

Earlier this year in April, Gupshup raised $100 million in a funding round that was led by Tiger Global and wherein it was valued at $1.4 billion.

Tiger Global has emerged as the biggest funder of venture deals this year.

Gupshup, which means chit chat in Hindi, allows businesses to communicate with customers through existing chat channels like text messaging, said CEO Beerud Sheth.

“We want to build relationships with these large investors because they can help us in a future IPO and for our growth. But … taking too much money can be dilutive,” said Sheth in reference to the buyback.

The buyback will also allow employees to cash out, a challenge for many startups as delayed IPOs have kept many founders and employees rich only on paper.

Whether on the public or private market, buyback deals were often a big endorsement of a company, said Paul Maguire, managing partner at Iron Edge VC.