28% of startup founders revealed that their valuation has increased while 41% of them expected it to increase in the short term. 1
Providing in-depth insight into the current startup landscape in India, 100X.VC India’s first venture capital fund to invest in startups using iSAFE Notes, released the second edition of its “ India Sentiment Outlook Survey ”. The survey is based on a sample of 275 founders from various industries and 77 investors who are primarily engaged in start-ups.
Sanjay Mehta, Founder and Partner of 100X.VC said, âOver the past year, we have seen the Indian startup segment strongly push back the market landscape driven by COVID-19. We think the optimistic outlook for startups and investors, as the survey results also show, is an encouraging factor. This will lead to more innovation and creativity to help the market and our nation as a whole. “
Here are some of the detailed results of the survey:
Founders survey results –
I. Become bullish: 47% of startup founders said they are currently experiencing growth, while 42% expected the same in the next 6 months. 10% expected it after 6 months as well, while 1% of founders did not expect growth at all. Over the past two months, several growth opportunities have emerged across all industries, especially in Tier 1 and Tier 2 cities, leading to deeper digital penetration and strong user adoption.
ii. Video conferencing with customers to stay: 24% of startup founders believe videoconferencing with customers is here to stay. The vast majority of them (55%), however, expected a change in the next 6 months. 21% of respondents also said it will stay there for at least 12 months.
iii. Funding by investors of early stage startups: Almost two-thirds of survey participants (65%) expected seed funding from angel investors to increase in 2021. 20% of them said the opposite would be the case. 15% also said there would be no change in the current model. When asked about feelings of micro-VC, a similar trend was observed. However, more people thought there would be less investment compared to those who did not expect any change.
iv. Funding initiative: Start-ups planning to raise funds in the next 6 months stood at 88%. 4% of startup founders were not raising funds in the near future. 8% expected to do so between 7 months and a year. It’s a pleasant surprise that over 40% of startups don’t change their fundraising plans. However, 23% of them delayed their fundraising initiatives while 12% reduced the size of their rounds. 25% aimed to ask for more capital than before.
Angel investors and individual investors (34%) lead the rankings in terms of sources of funding. Micro-VCs ranked next at 21%, followed closely by venture capitalists at 18%. Angel investor network syndicates (13%), private equity (4%) and family offices (3%) were also cited as sources of funding alongside others.
v. iSAFE saves new founders: A whopping 67% of all respondents surveyed found iSAFE useful and a user-friendly tool for founders. However, 30% of them were unfamiliar with iSAFE and 3% also thought it was not useful.
vi. Aggressive expansion strategy: With the non-linear demand curve that the market is currently following, more companies are inclined to expand into new markets (33%), hire aggressively (29%), and increase their product portfolio (21%). ). Other key areas of focus also included increasing track and conserving cash.
vii. The evaluation game: 28% of startup founders revealed that their valuation has increased while 41% of them expected it to increase in the short term. 19% reported no change while those who felt it had decreased or was about to decrease were at 6% each.
viii. Deadlines for closing the transaction: The founders were also asked about the time it takes to close a deal and receive the capital after the terms end. A majority (almost 69%) said it takes between 1 and 4 months. 11% of respondents said less than a month, while 20% also said it took more than 4 months.
Investor survey results –
I. Investor survey: 100X.VC also surveyed 77 investors including angel investors (51%), venture capital firms (21%), micro-VCs (9%), family offices (7%), a network of angels (7%) and private equity players (5%) participated. 70% of all respondents said they see growth in their business, while 23% expected it in the coming months. 68% also asked their portfolio companies to be more aggressive while 30% urged them to maintain the status quo.
ii. Recovery and the Rising Unicorns: A V-shaped (44%) and U-shaped (42%) recovery was observed by most players in the venture capital industry. 11% also saw a K-shaped recovery and 3% had an L-shaped recovery. As for unicorns, 40% of investors estimate that there will be 75-100 unicorns in India by 2025 35% of them think the figure will cross the 100 mark. 25% of them were not sure.
iii. A wave of IPOs in startups is expected: In 2021-2022, nearly two-thirds (65%) of investors believed there would be a wave of IPOs of Indian startups on the stock exchanges. 19% of them were also of the opposite opinion while 16% were not sure.