record $38 billion poured into India’s startup ecosystem, three out of four startup founders believe the fundraising environment will be even stronger in 2022, according to an industry report.
Almost 92% of founders who attempted to raise capital in 2021 said they had a favourable experience and 75% of them expect the environment to get better this year, according to Startup Outlook Report 2022 by venture debt firm InnoVen Capital.
Of the 100 startup founders across stages and sectors—such as fintech, SaaS, D2C, B2B, logistics and education—who were surveyed, 83 have a higher bias for growth over profitability, the report said.
Amidst investment frenzy in 2021, almost 44 startups
entered the coveted unicorn club of firms having more than $1 billion in valuation.
“2021 will be remembered as the year when the Indian venture ecosystem hit an inflection point,” said Ashish Sharma, managing partner of InnoVen Capital India. “Perhaps the most promising aspect was the IPO story, with Zomato and Nykaa leading the way.”
According to the report, now in its seventh year, 84% of founders had a positive fundraising experience (92% of all founders that attempted to raise capital) in 2021. This is significantly higher than 2020 when only 54% of founders felt so.
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While the Covid-19 pandemic has made India Inc. focus on healthy financial metrics and profitability, 83% of startup founders said growth is their focus area more than profitability.
A mere 20% of startups surveyed claim to be Ebitda profitable, while 51% aim to turn Ebitda positive in the next two years, the report stated.
Encouraged by successful initial public offerings, notably those of
Zomato and
Nykaa, 71% of founders believe that an IPO is the likely mode of exit for investors. This is a significant increase over 2020 when 47% founders held that view. About 58% of founders chose IPOs in India as the most preferred exit option compared to 30% in 2020, the report said.
“This report is part of our continued effort to gauge the current sentiment, as seen through the eyes of entrepreneurs,” Sharma said.
Interestingly, quick commerce (grocery delivery) was highlighted by the founders surveyed as the most overhyped sector, while healthtech was chosen as the most underhyped.
InnoVen Capital is a debt firm with offices in India, China, and Singapore. To date, InnoVen Capital India has completed over 300 transactions with more than 175 startups, including Byjus, Swiggy, Infra.Market, Eruditus, Pharmeasy, Shiprocket, Elasticrun, Oyo Hotels & Homes, Dailyhunt, CureFit, Vedantu, boAt, Licious, Udaan, Ofbusiness, Zetwerk, Moglix, Firstcry, Mensa Brands, Blackbuck, Rebel Foods, Cars24, Spinny, Slice, BharatPe, and Pepperfry.
