'Mindless growth at any cost theme' will no longer be the thing now

Founded in 2018, Better Capital, the early-stage venture capital firm continues to invest in SaaS, Web3, Fintech, Climate and other segments. It is tracking the market pace but not slowing down

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At a time when funding winter is forcing a correction in startup valuation and making investors shun startups without a clear path to profitability, Better Capital claims it has rarely walked away from an investment because of high valuation. "At the same time, we don't even enter a process where we think valuation is way out of range. We think markets automatically recalibrate valuations and we focus on ensuring the "right sizing of valuation" based on the market sentiment instead of recalibrating it ourselves," says Vaibhav Domkundwar, CEO, Founder, Better Capital.

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According to Domkundwar, raising funds by startups will be as hard as it is today or get even worse as the global macro environment concerns remain. There will be a trickle down effect to all the stages of investment including pre-seed even though the frothiness of the growth stage got corrected the fastest. "However, Better's focus remains the same through cycles unless there is a systemic or regulatory change that affects a particular category."

Founded in 2018, the early-stage venture capital firm continues to invest in SaaS, Web3, Fintech, Climate and other segments. It is tracking the market pace but not slowing down. "Our bar keeps going higher with more decision-making data we track across our investments and we use that to pace ourselves more than anything else. Good teams, large TAMs and increased demonstration of traction & PMF will be required for high quality rounds to happen," says Domkundwar.

Domkundwar believes that it is the new rounds of funding that will see the larger percentage of investments as it has been true at Better Capital too. In these times, the firm is ensuring that its companies are well-capitalized and have the leverage on their size as they get to PMF and beyond.

"The mindless growth at any cost" theme will no longer be the thing now, says Domkundwar. "We believe the best founders didn't fall for this but many are learning it the hard way right now. The best companies will continue to raise comfortably though the process will be slower. The best founders are learning to navigate this correctly and we are actively working with our portfolio founders to ensure this."

Amidst the downturn, Better's funding strategy remains the same. It wants to be the first institutional investor at the founding stage of the companies it loves. SaaS, Web3, Fintech, and climate will be key focus areas for it in 2022.

Fact sheet

Companies: 175+

Unicorns: 2

Sectors: SaaS, AI,Web 3, Commerce, Infra, Climate

Companies valuations: $7B