Seed and Series A investments grew 88% and 22%, respectively, in January-March compared to the same period in 2021. Venture Intelligence Which was shared with ET Show.
This is important at a time when ‘funding winter‘ Which has slowed down large late stage deals.
Last year’s early-stage investments rose 75% compared to 2020, with nearly 250 companies raising Series A rounds against 143 companies, the data, which is part of the firm’s Series A Landscape Report, showed.
“In the early stages, founders are building companies that aim to be valuable 3-4 years into the future. Therefore, much of an improvement today is unlikely to affect a founding team just starting out. Pranav Pai, founding partner, 3one4 Capital, said. “Tech companies have a gestation period, and now more capital is available to provide this runway to these young companies. This is a good thing for India, and this ecosystem has been nurtured over 15 years now.”
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According to Pai, the investment may be less this year, but the amount may be higher than the level of the last few years.
“We expect to enter the seed stage of around $0.5-0.7 billion in 2022,” he said.
ETtechMarquee fund managers like Sequoia India and Matrix, which have recently garnered large capital pools from investors, are open to early stage deals.
According to the report, between 2018 and 2021, Sequoia Capital (88 deals) was the most active seed for a Series A investor in terms of number of deals, followed by Axeler Ventures (49), Accel India (48), 3one4 Capital (41). ) Were. ) and Bloom Ventures (39).
Sequoia recently said it had set aside more capital to invest in its seed program surge, and would seek to write larger checks of up to $3 million,
ET reported last week.
The report details how 2,863 companies increased seed investment during the period 2015-2021.
Of those companies, about 18.2% (521 companies) advanced to the Series A round and 6.1% (174 companies) advanced to the Series B round, 2.7% (76 companies) went to the Series C round, and 0.9% (25 companies) ) ) advanced from the Series C round.
Of the 521 companies that raised Seed and Series A rounds during the 2015-2021 period, 174 companies (33.4%) raised Series B rounds. It showed that 76 (43.7%) out of 174 companies advanced to Series C rounds, and 32.9% (25 companies) of those companies that raised Series C rounds went ahead with Series C.
ETtechAnkur Pahwa, Partner and National Leader – E-commerce & Consumer Internet, EY India, said, “Capital tourism has declined, but its impact is felt more at the growth stage than at the initial stage of investment. “Given the adoption curve in India, startups have significant head room for business growth which will also reflect the rapid rebound in India versus other geographies.”
Technology and tech-enabled businesses contributed over 76% of Series A investments in the 2015-2021 period.
Data from Venture Intelligence shows that consumer-facing businesses (B2C), which accounted for 54% of Series A investments, were preferred over business-to-business (B2B) startups in the 2015-2021 period.
According to the report, e-commerce was the most preferred sector for investment during the period 2015-2021, followed by software as a service, fintech, healthcare (including health-tech), and food and beverage (D2C brands). including).
“Early-stage deals are relatively more insulated from interest rates and volatility in public markets than growth-stage deals. Vaibhav Aggarwal, Partner, Lightspeed Venture Partners, said, “Strong founding teams are keeping start-ups going and top funds like Lightspeed, Accel, Sequoia have fund crunch – hence the investment activity continues. “…founders and investors are now more cautious and are taking longer to get to know each other well.”
The strong and steady investment momentum should continue for the rest of the year, he added.
“Deals are progressing at a slower pace than last year, but investors like us are open to business with strong teams and startups,” Agarwal said.