The Apex Predator He believes that there are multiple white spaces within a broader investment focus that need attention like animal health, waste management, soil health, alternative protein sources, and new age rural fintech solutions
By Saptak Bardhan •
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The entire investment space is going through a tumultuous period as founders seeking seed and series A investments to launch and scale startups are witnessing no additional challenges. Many funds that cater to these stages have successfully raised funds in the recent past and are ready to deploy them. However, growth stage companies seeking larger rounds are facing longer diligence processes and more cautious investment teams. There are funds available for high potential companies even at this stage.
"Valuations have now begun to reward fundamental metrics more than unsustainable growth metrics. This is a welcome shift as it allows startups to focus on building real value instead of chasing vanity GMV metrics in the hope that it will attract investors. Growth stage companies will no doubt see a push back from investors that want to ensure that their growth is based on a strong foundation," said Reihem Roy, partner, Omnivore.
Reihem and Omnivore continue to focus on companies that are creating real value for India's small holder farmers. He believes that there are multiple white spaces within a broader investment focus that need attention like animal health, waste management, soil health, alternative protein sources, and new age rural fintech solutions.
"I think this holds true irrespective of the investment climate; the VC model is predicated on giving all companies in a portfolio the same access and support, but fiduciary responsibility necessitates that after a few rounds, capital is channelled to high performers," added Roy.
He indicated that if there is a clear line of sight to milestones that may serve as an inflection point for the company, a bridge round would make sense. However, the markets are not seeing a slowdown in the pace of new investments at the seed or pre seed stage. Deep tech companies, R&D companies, or any company with a long gestation period needs to be safe guarded in periods of frugality. The nature of these companies often allows them to recalibrate its plans and burn.
"In 2021, farmer platforms and fintech, agri B2B marketplaces, and farm-to-consumer (F2C) brands were the dominant investment themes in agritech and these will continue to receive significant funding in the coming months. In the coming year, we at Omnivore are keen to fund more climate-focused innovations for agriculture, agrifood life sciences, and deeptech themes including precision agriculture," commented Roy.
Roy is of the opinion is that the reality of investing is that metrics that are most likely to facilitate the next round of investment are the ones that are prioritised. If the market rewards GMV over margins, startups and investors respond accordingly. When markets correct and being to prioritise unit economics, startups and investors follow suit.
