In April, investors deployed about ₹208 crore in 14 seed and pre-series A funding rounds, known as early stage deals
Most startups have struggled with cash flows in an uncertain fund-raising environment caused by the covid-19 outbreak.
Not so the startups that are tapping into the unique opportunities emerging from a disrupted landscape.
Over the past two months, a large share of early-stage investments from venture capitals have flown into startups that allow people to interact, shop and learn from their homes.
Activities of the new normal include video-conferencing, data analytics, contact-free shopping and delivery, and online fitness and education.
“Fresh investments into startups are being assessed by three metrics: the first is their short-term relevance during the ongoing crisis, second, how they will be able to meet the needs of masses once the situation begins to settle down and thirdly, how they will replace or digitise the pre-covid-19 business models in the long term. The opportunity lies in technology-led firms across sectors including education, health, fitness, events and logistics," said Anil Joshi, managing director of Unicorn India Ventures, an early-stage technology-focused venture capital fund.
In April, VC fund Sequoia Capital India’s accelerator programme for startups, Surge, backed seven early-stage firms, including data collaboration startup Atlan, online fitness firm Fittr and digital business procurement firm Procol.
While Atlan democratizes data and allows enterprises to collaborate with engineers, data scientists and business users on various internal and external data projects, Fittr is a community-driven online fitness platform and Procol helps food, retail and consumer goods companies to cut their procurement and related supply chain costs and time through digital interventions.
Similarly, location analytics startup Locale.ai, which works with mobility and delivery companies in the US, France, Argentina and India, raised an undisclosed pre-seed funding in April, led by early stage venture firm Better Capital. In March, Airmeet.com, an online virtual event organiser platform, raised $3 million led by Accel India.
“Today, most VC funds are under pressure to deploy capital, albeit slowly and cautiously. Considering their earlier bets, which were mostly into sharing economy-based startups, are seeing a decline in demand, we see startups that promote social distancing and provide the ease of working from home as good investment opportunities," said Mohit Gulati, managing general partner, ITI Growth Opportunities Venture Fund.
“I presume that even large VC funds would look to deploy capital into early-stage startups that cater to the needs of the future. So, while the fund-raising environment may continue to remain uncertain for late-stage and loss-making startups, most deals will happen at an early-stage with lower ticket sizes of $1-4 million across a bulk of these tech-led startups that cater to futuristic needs," he added.
Early-stage investors are busy with deal making even under lockdown, as they look to bet on emerging themes. In April, investors deployed ₹208 crore across 14 seed and pre-series A deals, known as early stage deals, higher than the quantum of capital deployed in the previous three months.