The last 24 months have been very difficult for start-ups to raise funds. Funding declined by nearly 60 per cent from the highs of 2021. This, in hindsight, helped companies tighten their belts and become more capital efficient to ensure that their operations ran for a much longer time than envisaged. Companies, and I would say even investors, focused on growing the top line sharply but also ensured they watched the bottom line. It ensured that companies’ bottom line changed from red to black or moved rapidly towards profitability!
The focus on governance, compliance, cash flows, unit economics, et al. is bringing back investors to the table. There are several reasons:
Companies built on leaner models, emphasising scalable businesses with growing top lines and bottom lines
The Indian start-up ecosystem is sitting on $20 billion of dry powder, which needs to be deployed.
Tech salaries are more affordable, and companies are becoming better at retaining their teams.
Talent is choosing to stay with their current jobs rather than the massive job hopping we saw two years ago.
With the Indian economy tracking extremely well in comparison to other economies, it is the shining star to attract investments.
All of the above is an excellent opportunity for early-stage investors to invest in innovative companies solving real problems and create assets for growth or PE funds to come in as they, hopefully, open up their coffers later in the year or next year.
Also Read: Start-ups In India Grew Over 300 Times In Ten Years: Union Minister Jitendra Singh