About half a dozen venture capital investors have made their debut since the start of 2018, showing higher interest in India’s startups. Some of them include Montane Ventures, which has Ajay Piramal’s office as a lead investor, Fundamentum, which is backed by Infosys co-founder Nandan Nilekani, 021 Capital, which is founded by the personal investment advisor to Flipkart, Sailesh Tulshan and Helion Ventures and Leo Capital.
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There are many others like Emery Capital, a Russian venture capital management company, Jadevalue Fintech, a Chinese company and Yesss Capital, a fund focusing on start-ups in Europe and North America who are also on the list. The participation from local corporates is also a validation of the growing confidence amongst the investors. Anand Lunia, co-founder at India Quotient stated that the reason behind more domestic investors is due to the teams of existing funds that are splitting up and starting their own fund. There are also another set of people with high net worth individuals who are ready to back venture funds for startups. It also throws light on the fact that investors have realized that local startups can create value if they have to complete with global companies.
There is a lot of activity surrounding venture investments. The companies have grown and are creating value for the shareholders. Homegrown businesses are standing tall against companies with huge investments. They have managed to create value for the investors which are why there is more capital pouring in at different stages of the business cycle. The investment made be venture capitalists in the first quarter of 2018 was about 29% lower than in the first quarter of 2017 which saw $5.2 billion invested through 152 transactions.
People into angel investing have already raised funds worth INR 100-150 crore to make an institutionalized seed stage investment. The investors see liquidity in terms of fund raise and the activity has also changed positively from Series C. The economics have become stronger for the market leaders and there is a pickup in the activity. Experts say it is the Walmart-Flipkart deal which has given a good push to the startups in the country. The deal is an ideal representation of the Indian community where investors are given very good exits. This deal has brought exits on the front page and it is a positive sign. However, it is important to remember that Flipkart story was a journey of eight to ten years. It was not built overnight.
The deal is a good signal but the real joy will begin when a number of such investments happen. Although investors are making cautious bets, it is a good start overall. Some mid-market deals will happen soon so that there is liquidity and depth in the industry.