Betting on Early Stage at all Times

Anurag Ramdasan, partner, 3one4 Capital believes that markets have definitely slowed down a bit due to the macro conditions, but in the Indian ecosystem, there's a lot of dry powder in the early stage

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Capital efficiency is something that 3one4 Capital, an early-stage venture capital firm that manages a portfolio of 90+ companies across SaaS, D2C, digital media, deeptech, fintech, has always advised its portfolio companies and continues to do.

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Anurag Ramdasan, partner, 3one4 Capital believes that markets have definitely slowed down a bit due to the macro conditions, but in the Indian ecosystem, there's a lot of dry powder in the early stage and hence we can expect deal closures to happen, even though the overall pace might be a bit slower.

However, with funding slowly down growth stages, he is seeing it becoming tough to raise at valuations higher than 500 million in today's market. "For most growth investors, given the public market multiple, entering at that stage has stopped being lucrative for the time being," he says.

Given that larger companies in public markets have seen corrections, Ramdasan also feels that it is safe to expect those corrections to trickle down to the early-stage market too. "We are already seeing seed deals happen at lower valuations than 20-21," he says.

The firm continues to stay sector agnostic and would invest across all categories in the early stage. It strongly believes that there are a lot of diverse opportunities to invest in the Indian startup ecosystem and it is actively tracking all of them.

The firm hasn't slowed down the investment activity as yet. "We have been investing in new companies as well as doubling down on existing portfolio companies. We expect the overall funding activity to be lesser than 2021 however overall we expect the baseline for funding to only move higher. We continue to look at all sectors in early-stage including consumer internet, SaaS, Fintech," adds Ramdasan.

He also feels that there will be a few bridges as companies struggle to raise capital at 20-21 valuation expectations.

Sharing his thoughts on the kind of companies that are likely to get invested first in this current scenario, he says "There has been a fundamental shift in focus towards higher discipline in businesses and looking more at unit economics, LTV/CAC etc. This is a stark contrast to the growth focus of last year."