Rockstud Capital Views For Silicon India Mazgine
Startup is no more a buzz word in India, it's the reality. From days of doubts on the kind of business model and business tactics of burns, ecosystem has accepted the new way of doing business. Dreams are getting bigger, new technologies are getting nurtured, VC money is flowing and certainly no slow down at least in this part of the world. Interestingly, what most of the time is getting reported in media headlines is either who got how much funding or how much one startup is burning. Very few shows that how much they are hiring and adding numbers to the GDP.
Let facts do the talking. Indian startup space continues to thrive as we saw over half a dozen new unicorns being added in 2019. This includes the likes of BigBasket, Rivigo, Delhivery, Druva, Dream11, Ola Electric, among others. As the ecosystem continues to mature, we are seeing more action at the late stage deal cycle (Series C & beyond) vis-à-vis seed/early stage. Between Jan'19 to Sept'19 we saw a total of 144 deals at the late stage vis-à-vis 107 deals between Jan'18 to Sept'18 (increase of 35%). During the same period, the total funding increased by 26% from $5.8 Bn to $7.3 Bn.
One the other hand, we saw a drop of 31% in no. of deals at seed/early stage during the same period,
Consumer focused businesses continue to garner attention as well as funding. For 2018 and 2019 (YTD), they were the most funded sector in India. Retail, Fintech, Enterprise Applications and Energy make up the top 5 funded sectors in last 2 years. These 5 sectors make up about 3/4th of the total funding raised by startups since beginning of 2018.
In 2018, Bangalore, Delhi NCR and Mumbai cornered over 80% of the startups deals as well as funding. Bangalore saw 509 startup deals with aggregate funding of over $5 billion whereas Delhi NCR saw 415 startup deals with total funding of $4.7 billion. Delhi NCR has seen heightened activity and is giving tough competition to Bangalore for the No. 1 slot. Third placed Mumbai saw 319 deals with $1.8 billion of funding. Other cities that saw decent startup activity include Chennai (81 deals), Hyderabad (79), Pune (60), Jaipur and Ahmedabad with 21 deals each.
What are these things indicating at? The momentum has picked up a lot after investors made big of the exit from Flipkart, the poster boy of Indian ecommerce boom. Investors are putting faith in the emerging ideas and backing entrepreneurs. Interestingly, second- or third-time founders who sold or exited successfully in their previous ventures are the most sought-after fund raisers these days.
Consumer focused businesses continue to garner attention as well as funding and were the most funded sector in India in 2018
We at Rockstud Capital feel that it is one of the brightest times in the history of our country to become an entrepreneur. Whether your idea succeeds or not, the try is worth a shot. Government is supportive through their recent changes in tax structures and compliances, ample accelerators, incubators, angel network platforms to raise seed capital followed by VC funds supporting the idea at various stage of funding. Its doesn't matter which sector attracts the most capital because it keeps on changing every year. What matters is that innovation should continue to happen. Whether Agritech or fintech, ML or and AI, VR or AR, Ecommerce or consumer brands, every space will see action and will get a clear leader.
The mistake won't be that you as investor couldn't identify the actual winner but surely being ignorant and not taking a bet might be the biggest one.