Guiding Passionate Entrepreneurs in Tough Times

Ankur Capital believes that enhanced risks inherent in the business and funding environment will also reflect in tighter valuation benchmarks for funding rounds across stages

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With companies such as Niramai, Captain Fresh, Cropin and others, in its portfolio, Ankur Capital firmly believes in the power of technology to solve the world's biggest problems in climate, responsible agriculture and inclusion. With a wave of entrepreneurial energy directed towards developing and deploying such technologies, the firm likes to back passionate entrepreneurs with innovations in agritech, deep science tech, healthtech, edtech, fintech and digital inclusion. It invests in entrepreneurs who are driven to solve these hard problems and unlock large market opportunities in the process.

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Talking about the current uncertain times, Krishnan Neelakantan, managing partner, Ankur Capital says, "Liquidity has tightened considerably, listed tech startups have seen considerable erosion in valuation and uncertainty on the trajectory of global economic growth remains high. Investors will be a lot more circumspect about funding startups that do not have a strong proposition and visible differentiation."

The firm believes that enhanced risks inherent in the business and funding environment will also reflect in tighter valuation benchmarks for funding rounds across stages. "Late-stage startups are already seeing considerable pressure on new funding due to the drying up in funding from institutions that have taken big hits on their listed portfolios as well as the reset in valuations in public markets. Startups targeting B and C rounds will find significantly more scrutiny on metrics and profitability, but the ones that stack up well on these will be sought after by funders," he says.

However, the scenario for funding early-stage startups looks relatively better, in his view. "With clear evidence of a digitalization revolution and continued inflow of high-quality entrepreneurial talent into a maturing startup ecosystem, the appetite to fund early-stage innovation should remain positive," he says.

Neelakantan also expects the proportion of funding rounds that are 'bridge rounds' to rise, though they may not exceed new funding rounds. Further, if extending the runway or reducing cash burn becomes a challenge for its portfolio companies, the firm would guide them to narrow their focus to one or two core priorities, with clearly identified metrics and milestones that demonstrate the value creation trajectory to follow-on funders.

"We will also help them explore ways to control marketing spend or overheads by establishing cost-effective strategies and partnerships and seek out alternate funding options (venture debt, RBF etc) that could help extend the runway," says Neelakantan.