Will the Road Get Easier for India's Startups' Funding from Here?
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The month of March saw the Indian start-up ecosystem getting its first unicorn for the year 2019. Both January and February saw some great progress in terms of funding and all eyes are now on how the coming months are going to be like and what they are going to chalk out for the start-up sector. Is the road going to be easy? Are investors going to pump more knowing that start-ups hold great potential for business opportunities?
Mukesh Sharma, Co-founder and Managing Director of Menterra Venture Advisors says that there is a lot of dry powder and he feels that the future is positive, “Start-ups with deep consumer insights, demonstrated success through product-market fit and good revenue traction. They will, indeed, continue to get capital.”
The best way to express sentiments about the Indian startup community is to see the numbers. More than 17 start-ups bagged funding in January and more than 18 bagged funding in February. Over a billion has been pumped into the start-ups in just the first two months of the year!
Prof. Darshan Doshi who is also the Director of Centre for Entrepreneurship & Innovation at the FLAME University outlines the trends that will emerge. He says that 2019 is an important time for the start-up ecosystem and also one of the best years to begin a start-up in India. He also adds that the maturing Indian startup ecosystem is seeing some exits from domestic and international companies. “Large corporations such as Reliance Industries and Mahindra Group are co-investing with VCs and acquiring startups at the right valuations. Startups are also raising successive funding rounds faster today than a few years ago. This bodes well for investors who are taking the risk of investing in startups over the enticing stock market in the past couple of years.”
The funding game is going to be a success only when the argument works well for both the investor and the invested party. Nilesh Jain, Managing Director of Metaform Ventures, believes that start-ups, in their post MVP stages are prioritizing growth over profitability.
He says, “B2B start-ups have seen a lot better traction of funding than the B2C which need more follow-on capital. We've started to see some M&A activities, along with late-stage start-ups looking at IPO options.”
Healthcare and Education
While AI and food tech seem hot for investment, experts believe that healthcare and food tech will make their presences felt. Jain says that the sectors investors are looking to invest are in high impact areas like healthcare, education and cutting-edge technology product companies.
Prof Doshi says startups operating in healthcare, agriculture and financial services will attract the investors’ eye because “they are looking to solve challenges for the large market beyond the metros.”
It can be inferred that there is the availability of a pool of talent that investors are giving a platform to gain an eye of the world, and then there is a whole world waiting for these small businesses to make an impact. This pretty much defines start-ups in India!