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12 Jan 2021

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Startup Funding Options in India

Planning to launch your own start-up? Now is the time. India is in its best ever phase of startup ecosystem and the economic environment is favoring the aspiring minds. However, careful planning and futuristic approach are imperative to ensure your startup don’t end like the 94% that shut down their shutters within the first year of operation.

Funding is an extremely significant aspect in line with meeting the vision of a business. Funding and fundraising, both are fundamental modern business scenarios that support the growth of a startup. The first round of funding, popularly known as seed funding forms the basis of fundraising. It is followed by series A, B and C rounds of funding. While the seed funding typically refers to the basic, initial round of funding, series A, B, and C differ in the business maturity and the type of investors involved. The series funding helps in the evolvement of a startup to a full-fledged organization by helping it with calculated funds at crucial steps.

Here are a few successful startup funding options in India that will help you support your business with the indispensable finance requirements.

Go for Crowdfunding

The concept of crowdfunding is quite similar to mutual funds on a basic level. In this option, more than one investor is involved and they offer a fixed amount of money based on your business idea, goal, plan of action, and plans of making a profit. All you need to have are people who truly believe in your business idea.

Crowdfunding is gaining popularity as it ascertains the belief that your idea is also believed by other experienced players in the market. Crowdfunding also helps you in getting the crucial funds from the idea stage itself. You can gather crowdfunding from friends, family, and entrepreneurs who believe in your business concept and have the means to come together and fund your aspiration.

Consider Self-funding

Popularly known as bootstrapping, it is an ideal plan of action when it is hard to convince others of your business idea and vision. Often investors ask for traction before making an investment, the initial round of self-funding allows you to prove the feasibility of your idea and build confidence in the investors for a further round of funding.

Bootstrapping is a great idea for startup funding especially if the initial business requirement is small. It also gives you the freedom of being your own boss. You’re not answerable to anyone and it allows you to keep an eye on the revenue earnings as well.

Get in touch with the Venture Capitalists

A sure shot destination for big bets, venture capitalists offer you professionally managed funds who are looking for startups that have success potential. The best part about venture capital investments is the expertise and monitoring that they bring along. Ordinarily, VCs invest in equity and once the business releases its IPO or is acquired, they leave.

Venture Capitalists usually look for startups with a good enough traction and a strong team. But if you’re opting for venture capital funding, be flexible enough to take their inputs and accept the close monitoring.

Try Angel Investment

There are individuals with surplus cash looking for investing in promising startups and earn their share once it grows to its potential. They can either work alone or collectively in a network to screen startups with huge potential. This funding option has business minds looking to earn interest out of your success and they may expect as high as 30% equity as well.

Although angel investment comes with its issues of high-interest expectations and lesser investments as compared to Venture capitalists; it is important to remember that Google, Yahoo, and even Alibaba were a result of Angel investing.

Conclusion

Funding is required to take the best advantage of the existing and upcoming market opportunities. Even if you initially go for bootstrapping, outside funding is required to sustain in the long run.

10 Jan 2020

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State of the Global Startup Economy

The global startup economy remains large, creating nearly $3 trillion in value, a figure on par with the GDP of a G7 economy.1 Seven out of the top 10 largest com- panies in the world are in technology — the highest concentration of any industry sector among the top global companies — and 2019 saw close to $300 billion in venture capital investments around the world.2

Nonetheless, even at the end of 2019, not all was well. Inclusion remained a fundamental challenge for tech ecosystems, with only 14.1% of founders globally being female, as our Startup Genome research shows.3 Value creation by ecosystems remains concentrated, with about 74% of all value produced being concentrated in the top 10 performing cities globally. Tech giants like WeWork and the stable of unicorns funded by Softbank began to falter — ranging from major crises, as in the case of WeWork; to a capital crunch for others.4

But despite these challenges, we did not expect the major threat of the COVID-19 crisis to global ecosys- tems. Since the crisis hit:

Layoffs among startups are rampant, with just over a third of startups globally not laying off staff nor cutting hours, and with the typical startup with full- time layoffs letting go an average 33% of the staff; and
- Startups are facing a double whammy with a drop in consumer demand at the same time VC investments are dropping, leading to a crunch for capital. In fact, four out of every 10 startups have 3 months or fewer of capital runway, meaning they will die if they do not raise additional money and their revenue and expenses remain the same.

While we see early signs of a rebound in Asian ecosys- tems — nothing like a return to normal, but a slowdown of the drop — the startup economy is going through a major transition.

In 2020, the State of the Global Startup Economy can be seen through two main angles: the calm before the storm, up to Dec. 2019, and the consequences of the COVID-19-triggered crisis.

Most successful startups of 2020

The Calm Before the Storm

In the lead up to the crisis, the dominating trend for ecosystems globally has been the growing democrati- zation of tech across geographies.

Democratizing the Tech Economy

Despite the concentration of value in tech ecosystems, access to the tech economy is increasingly democra- tized.

In 2013, tech unicorns became a phenomenon, with the term popularized by Aileen Lee from CowboyVC.5 6 The name alludes to the rare and nearly mythical quality

of these companies. But

while still powerful they are not so rare anymore.

When we analyzed com- panies in the billion-dol- lar club — exits or private companies in technology with over $1 billion in val- uation — in 2013-2019 we see that in 2013 only four ecosystems produced unicorns or billion-dollar exits. Today, a cumula- tive 80+ ecosystems have done so, astoundingly.

18 Sep 2019

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India start-up scenario.

Why there is no better time than now to invest in startups

Investments in the Indian start-up ecosystem surged 322 per cent in July year-on-year. They rose to $5.61 billion last month, against $1.33 billion in July 2019, according to data from Tracxn, a firm that tracks investments and financials of private companies and start-ups. The funding that went into Jio Platforms’ alone accounted for nearly 87 per cent of the total amount

The number of companies that garnered the investment, though, fell to 82 last month, against 120 in the same period in 2019.

Top-funded sectors

The top-funded sectors include telecom ($4,854 million), enterprise infrastructure ($236.2 million), ed-tech ($164.95 million), real estate- and construction-tech ($78.1 million), retail ($57.42 million) and media and entertainment ($53.90 million). The consumer sector, which encompasses online and technology-enabled consumer-facing companies in the business-to-consumer (B2C) space, raised $183.47 million.

While Jio Platforms, Nxtra Data, Vedantu, Zolo and Toppr were the top five funded companies in July 2020, the most active investors – based on the number of deals in July – included Mumbai Angels, Matrix Partners India, Accel, LetsVenture and Unicorn India Ventures.