ETSA 2021: Early-stage deal flow remains robust despite market volatility

A number of top-tier enterprise capital funds have shifted their focus in direction of early-stage investing and attempting to catch corporations early.

Accel just lately arrange a $650 million fund that may give attention to early-stage investments. Sequoia has additionally been specializing in early-stage startups with the launch of its seed accelerator programme Surge.

Piyush Goyal, Union minister for commerce and business mentioned on the ET Startup Awards in Bengaluru on March 12, “To my thoughts the funding shouldn’t go into Sequence B, C or D rounds, it ought to relatively go to tier 2 or 3 cities as seed funding.”

The awards noticed policymakers come along with the most important names in startups to debate the way forward for early-stage investing in homegrown startups amid the present market volatility.

“It is vitally laborious to foretell the place the market can be within the subsequent 10 years however there shouldn’t be any discount in early-stage investing. Buyers have to choose nice founders and work with them to construct iconic corporations,” mentioned Shekhar Kirani, companion at Accel India.

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Kirani mentioned that the entire startup panorama has modified in 2022, pushing a number of massive traders to give attention to early-stage funding.

“There are extra extraordinary startups right now. The standard of founders has considerably improved, the standard of concepts have considerably improved and the best way founders construct startups and create worth for shoppers has improved quite a bit,” he mentioned.

Buyers additionally spoke about altering traits and altering the proportion of spherical sizes for early-stage investing. The IPO rush in 2021 together with a number of coverage adjustments have accelerated early-stage investments.

“Whereas the pandemic has slowed issues down, some coverage adjustments and itemizing of corporations have given a lift to early-stage traders,” mentioned Anil Joshi, Unicorn India Ventures.

Buyers see digitisation and crypto as the most popular sectors to speculate on this yr. “As a fund, we see few sectors which are fairly distinguished… the area round digitisation and crypto and NFTs (non-fungible tokens), as an example,” mentioned Unicorn Enterprise Capital’s Joshi.

Accel has been centered on 5 broad themes and can proceed to give attention to them in 2022, Kirani mentioned. “Shopper corporations, B2B Firms, marketplaces, world SaaS, fintech and digital well being tech can be on the centre of many disruptions,” mentioned Kirani.