Investors say they want to prize profit over scale and growth -a rare ask just a few months ago. “Founders need o focus on building a long erm business with their $5million cheques and plan to use it over 12-18 months instead of chasing a quick series Bround. Series A or large seed rounds have been easy to raise because a lot of VC funds have money for that stage.
However, on the flip side, most of these larger funds just don’t want to do series B rounds unless it’s their own deal. I’m hoping that this will change,“ said Anand Lunia, co-founder of early-stage fund India Quotient.
As many as 26 companies have racked up $50-100 million so far this year said the Tracxn data, which shows that not too many larger rounds are being done. Flipkart’s last three rounds have been led by its existing investor Tiger Global, while Snapdeal’s latest $500-million financing took more than six months to close.
Albinder Dhinda, co-foun der of one the most well-funded early-stage companies Grofers, says bigger rounds were always selective. “ And, going forward, they will get more saner in terms of valuations and scrutiny of the business. In general, we will see investors focus on business metrics rather than only growth,“ he says. Grofers raised $35 million in its second round of funding within two months of closing its $10-million series A fund-raise from Tiger Global and Sequoia Capital. The new round earlier this year was entirely done by the two existing investors and valued it at around $110 million post the investment. That was almost four times its valuation in the previous round.
The challenge in India, say investors, is that there has not been any prescribed path to liquidity in venture investing, whereas in the US there is a huge M&A market and option of going public is available. However, at present, staying private has been the norm.
For the full report, log on to http:www.timesofindia.com