Is the ice melting? Some startups defy funding slump with successive rounds

Earlier this week, B2b fintech startup- Perfios turned unicorn after it raised $80 million from Teachers’ Venture Growth. (istockphoto)
Earlier this week, B2b fintech startup- Perfios turned unicorn after it raised $80 million from Teachers’ Venture Growth. (istockphoto)


  • Multiple growth and late stage companies have raised capital at higher valuations in quick succession over 6-8 months, signalling a shift in investor sentiment favoring startups with clear profitability paths and product market fit.

Bengaluru: Many growth- and late-stage companies have managed to secure capital in quick succession over the last 6-8 months at higher valuations, indicating a shift in investor sentiment, favoring startups with clear paths to profitability and product-market fit.

Earlier this week, B2B fintech startup Perfios turned unicorn after raising $80 million from Teachers’ Venture Growth. The announcement came just six months after the company raised $229 million from Kedaara Capital in its Series D round in September. Others, include dairy-tech startup Country Delight, D2C backpack startup Mokobara, logistics provider Xpressbees and InsuranceDekho.

Country Delight, which closed its Series D round in April 2023, secured $20 million in Series E money in January. Country Delight's Series D round was raised at a valuation of $615 million, and at $819 million in the following round, according to media reports. 

Similarly, InsuranceDekho, which raised one of the largest ever Series A funding in February 2023, secured $60 million in a Series B round in October at a higher valuation of $600 million, according to data sourced by Tracxn. The round was raised at a higher valuation of $600 million, as per media reports.

"We have our eyes set on unit economics. At the company level, we are profitable…this funding will allow us to accelerate our efforts, reach more customers, and innovate further," InsuranceDekho's chief Ankit Agrawal said in October.

Manu Rikhye, partner, Merak Ventures, expressed similar views: "Companies like Country Delight, Xpressbees, and Insurance Dekho are attracting investment because investors are now prioritizing more than just rapid growth. They are looking at fundamentals such as unit economics. Only a few startups that have followed these principles are gaining the attention of high-quality investors." 

InsuranceDekho, Xpressbess and Country Delight did not respond to Mint's requests for comments till the time of publishing.

Although it's premature to interpret it as a sign of market froth, investors are of the opinion that private markets have rationalized, with only the best companies securing funding.

 “If startups in this environment are getting funded in eight months, it essentially means they are category leaders, demonstrating a clear product market fit and investors believe there will be a large IPO story within 2-3 years," Matrix partners' managing director Sudipto Sannigrahi said.

Sannigrahi's views mirror the success of Country Delight. When the company initiated its Series D fundraising in May 2022, its year-on-year growth was two and a half times, with revenues soaring by 50% within just six months, its co-founder Chakradhar Gade had said then. "Country Delight is now looking at becoming a leading natural food essentials business where we are looking to widen our product portfolio to cover all the food essentials a kitchen needs on a daily basis." 

However, these quick rounds pale in comparison to the rapid pace of deal closures witnessed during the peak of the funding boom in 2021, and during the pandemic years when capital was more readily accessible. With the surge in digitalization opportunities and an expanding addressable market, funding witnessed a meteoric rise, aided by higher liquidity and inflationary growth across assets.

However, over the past two years, the markets have witnessed a significant correction, with most startups taking longer to close a series round. This delay was evident for B2B platform Captain Fresh and payment solutions platform Escrowpay, which had significant gaps between successive funding rounds within a specific series.

Captain Fresh's Series C round began in September 2023 and continued till February, as per data sourced from Tracxn. On the other hand, Escrowpay saw its Series A round begin in October 2022 and extend till December 2023.

"Startups like Captain Fresh and Escrowpay are encountering difficulties in securing funding, primarily due to challenges such as ambiguous market fit or operational inefficiencies," Rikhye said, adding that this shift in the funding landscape has compelled these firms to reassess their business models.

Captain Fresh and Escrowpay did not respond to Mint's request for comment till the time of publishing.

Over the last six months, diverse funding trajectories underscore the market's complexity, with investors attributing the gap between successive rounds to various factors, including due diligence. 

"Series rounds have been taking a little more time to close now versus two years back, because the level of diligence conducted by investor has gone up several notches…earlier multi-100-million-dollar rounds used to close super fast without diligence, which is the wrong incentive structure for the whole ecosystem," Matrix's Sudipto said. This is good for the markets in the long run as only resilient founders will sustain, he added.

According to Sajith Pai, a partner at Blume Ventures, while the typical gap between two successive rounds should be 18-24 months, there are various factors to consider if they occur too rapidly: the round might have taken longer to close, lacked prominent investors, or faced valuation resets and other legal hurdles. This could have led to the announcements being bunched up, he said.

Growth investors have become very selective with their investments, and startups may resort to bunching a series of rounds to make it look like a large round without going into specific companies, Pai explained.

Early-stage venture capital firms, such as 8i Ventures, said that the deal cycles are getting longer. "It's not just specific to later stage cycles, even seed deals are taking 4-6 months, which is alarming," Vikram Chachra, founding partner of the firm, said. As we enter the third year of a funding winter, it is usually during periods like this, when some of the greatest tech companies are born and, therefore. “ we are optimistic" about investments in India, he added.

Earlier this week, 8i Ventures launched a seed funding initiative. With investments of up to $2 million across pre-seed to early revenue phases, it seeks to help foster growth across various industries, the company said ina statement. The VC firm had previously supported the likes of Slice, M2P, Easebuzz, and Blue Tokai.

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