Early-stage startup funding increases amid digitalization push

CIOReviewIndia Team | Tuesday, 03 November 2020, 04:48 IST

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Amid digitization push, Early-stage startup funding rises

On the back of faster digitization of existing offline businesses across edtech, fintech, consumer tech, social commerce and healthcare, among others, Venture capital firms have stepped up funding in early-stage startups. 

According to data by Venture Intelligence, compared to $180 million across 75 deals in May-July with 101 deals worth $323 million, the early-stage investments saw a sharp uptick in the August-October period.  

“This is a positive time for early-stage startups as they are seeing traction from both customers as well as investors. As is the case with any cycle, large winners will be created from this increased investment activity. Rapid digitization brought about by the pandemic and the following lockdown/remote work environment has given a strong growth momentum to many sectors as startups reach faster product-market fit," said Mayank Khanduja, managing director , Elevation Capital (formerly SAIF Partners).

“Investors continue to be active and focus on less risky early-stage bets. The pandemic, along with digitization, has created a level-playing field for early-stage startups, which are challenging the matured platforms now. More companies are meeting the bar as the ‘opportunity’ they are chasing becomes more real, and customer cognizance towards digital solutions increases," said Sanjay Swamy, managing partner, Prime Venture Partner, which announced three deals in the September-October period.

“There is clearly enough ‘dry-powder’ in the market, which we see now being deployed across pre-Series A and later stage deals, as investors continue to tread with caution. Early-stage deals are much easier in terms of diligence than late-stage, especially when pandemic affects physical meetings," said Karan Mohla, partner, Chiratae Ventures.

“Given that our fund’s theme is deep tech, tech IP / innovation, it should bode well for us. We are actively doing and sourcing early-stage deals. We have seen edtech, healthtech, consumer tech and fintech perform relatively better in recent months," Desai said.

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