While risk investors pumped about $40 billion into Indian startups last year, 2022 may see this wave subside, owing to the crunch in global liquidity and the ongoing conflict in Ukraine, industry experts, startup founders and investors said at the ET Startup Awards ceremony in Bengaluru on Saturday.
“This (slowdown) is probably being seen in late-stage deals, where rounds are larger. In the early stages, funding continues to be robust,” said Alok Goyal, partner, at Stellaris Advisors. According to Goyal, early-stage rounds continue to see traction from investors as they look to bag a meaningful share of young companies.
While some said the liquidity boom in the past 12-18 months was driven by the increased demand for tech latent and, others felt.
Many of them added, however, that Indian startups are now on stronger footing than before the pandemic and have the resilience to endure a possible funding winter.
While many companies that raised capital in the past 12-18 months are now using their cash judiciously, companies that are in talks with investors to raise more funds are now expediting the process as they look to close deals quickly, experts said.
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“The rounds are getting done, nonetheless. Maybe at a lower than expected valuation, slightly extended timelines or the round sizes are being cut down. But the funding is still continuing. There is enough dry powder waiting to be deployed inevitably. ,” said Vinod Murali, managing partner, Alteria Capital Advisors.
Experts ET spoke to said the overall mood remains one of cautious optimism. They said the groundwork for future growth across sectors has been laid and that most companies will survive the funding slowdown as they shift their focus to achieving stronger financial metrics and profitability.
