Analyzing the current start-up investment and funding environment, Neha Khanna, Director, Enablers states that the funding has not dried up but is on hold in the short term owing to an overflow of deals and sudden momentum last year. Every sector passes a stage when there is a slowdown in monetary flow which is reinstated rationally over a medium term. The start-up sector is still promising and has numerous policies which are work-in-progress in its favour. The current consumer environment is also in complete support of the start-up ecosystem in terms of reception of innovation. Therefore, in the long run, seamless growth for sound and sustainable businesses is inevitable. The current slowdown is merely a correction rather than a complete halt.
The sector requires filtration at various stages of funding to judge and filter out non-visionary start-up ideas. It is also an opportunity to let Darwin’s old theory of “survival of the fittest” play out. The scenario is in a need for quality deals wherein the sustainability and scalability of start-up ideas is clearly laid out and considered by every investor. At Enablers, in our transactions, differentiation in terms of technology/ product/ offering as well as seamless execution by an abled team is key.
The Stage is set for consolidation of businesses and closures of non-performing businesses and teams before funding picks up again.
She adds, there are a series of funding stages and the flow of seed funding were flooding in past years, whereas Pre-Series A rounds have become common with inability to raise Series A, thereby, providing an opportunistic play for investors to close good deals and take some punts. We thus, observe institutional funds utilizing this period to evaluate and review numerous companies and hold conversations so they can track clear winners in the medium term and thereby, make them part of their portfolio.
The author is Director, Enablers & Valpro