The Thesis Driven Investor
Stellaris Venture Partners are seeing strong deal flow in a number of different spaces such as fintech, web3, SaaS, creator economy, EV ecosystem and climate tech
"We do not get swayed by the flavor of the day in our investing. We are a thesis driven investor, building 5-10 year thesis on markets," said Alok Goyal, partner at Stellaris Venture Partners.
The startup ecosystem is going through a tough environment. Given the meltdown in public markets, late stage funding will get tougher, there will be higher selectivity, as well as lower valuations. "For the early stage, however, things have not changed as much - most funds have enough dry powder, and they take a 7-10 year view on the market. Similarly, for higher burn companies or companies with poorer unit economics, mostly consumer centric startups, the funding environment will be tougher. SaaS and B2B will be less impacted."
"Late stage funding will be tougher, it will be impacted by two challenges at that stage. Firstly, their exit duration expectations are shorter. With public markets melting so rapidly, late stage investors will worry about the next exit window in the market and poor visibility on that front, are likely to hold on to their purses. Secondly, many companies raised their last rounds at large valuations. With public market comps lower, new offered valuations will be lower or flat for many companies, which may make fundraising hard," he added.
The firm works closely with all of its portfolio companies on their burn and runway, and helps founders plan scenarios. Even during the last 12-18 months when the market was at a high, the company was working with the founders to plan their burn and runway. "Capital is a vital input for all the companies that we back, and we are fortunate that most of our portfolio is very well capitalized. Most companies that we work with have only two real costs - people and marketing, and we work with our portfolio to plan for both well ahead of a potential train wreck."
The company expects to invest at an unchanged pace in the future. "We have enough dry powder, and continue to see a healthy deal flow. In fact, unlike last year, we are also getting the time to do proper diligence and build conviction. We are seeing strong deal flow in a number of different spaces that includes fintech, web3, SaaS and creator economy. We are also seeing some early shoots in the EV ecosystem and in climate tech."