Feature

Ten trends to look out for in the venture-funding industry. Because, as they say, follow the money

If you are interested in SaaS and edtech, start coding. If you are not, read on, there are other ways to get rich 

Shutterstock

This year began on a desolate note. If it were a movie, it would have the background music of a plaintive violin and the visuals of dipping line graphs, showing the falling pace of GDP growth, economic activity and employment opportunities. Na koi umang hain, na koi tarang hain. Then, instead of Asha Parekh finding romance and happiness with Rajesh Khanna, she would walk into an “M Night” Shyamalan movie. 2020 got darker, with people unsure about their jobs and shut out from the world to save themselves from a constantly mutating virus. It seemed like a series of nightmares, with memes on the next disaster, which some speculated would be an invasion by hostile aliens. But, we are here to tell you that a happier story has been playing out in another corner, the corner with a sense of ‘ad-venture’.

With that forced pun, we are pointing to the venture-funding universe. Here, though initial days were unsettling, with business travel restrictions and valuations done over Zoom calls, investors and founders have managed to find their feet and start sprinting again. There are more pitches being heard and bigger cheques being written. 

The general sentiment in the venture world is that digitisation, even under compulsion, has provided several opportunities and has snuffed out bad financial behaviour. Sajith Pai, who is a senior member of the investment team at Blume Ventures and is building a research platform for the firm, says that more pitches can be heard and at a faster rate because meetings have gone digital. “We are also seeing it become easier for high quality and second-time founders to pitch to multiple venture capitalists, and deals are getting very competitive,” he says. There is global interest in Indian companies now, as edtech, fintech and SMB SaaS adoption and trial “shoots through the roof”. 

Parag Dhol, managing director at Inventus Capital India, says this crisis has made founders more responsible. He saw people cut back on spending “very early and very deep”. “Their losses may go down significantly, but discipline will definitely go up,” he says. BlackSoil Capital’s co-founder and director Ankur Bansal says there is a greater focus on profitability now, an attitude he sees carrying into the next fiscal. “In the past, many start-ups pursued unsustainable customer acquisition strategies and growth targets to inflate their valuation. The pandemic has forced such companies to focus on healthy unit economics and profitability. Growth focused and high cash-burn start-ups have had to turn to extensive cost-cutting measures and layoffs just to survive,” he says.