63% of investors expressed interest in participating in seed and angel rounds while 37% wanted to participate in growth rounds.
With the Indian startup ecosystem witnessing a record year of growth for startups and investors, LetsVenture, India’s leading early-stage investor released key findings from its platform documenting the key trends and changes that transpired in 2021.
In order to arrive at the findings, LetsVenture analysed data from over 7000 startups and investors who registered on the platform in 2021. With over 200 plus funding deals closed this year by LetsVenture, the key findings are representative of the emerging trends in the early-stage startup ecosystem of India.
Double-digit growth from startups and investors
Compared to 2020, LetsVenture witnessed a 23% rise in startups applying to the platform to raise funding and a 30% rise in investors registering to angel invest in 2021.
LetsVenture also recorded a 120% jump in the number of deals, with 225+ transactions done in CY2021.
Younger investors and seasoned founders rule the roost
An interesting trend that emerged this year was a younger age group of investors and a higher age group of founders. In the previous years, the startup ecosystem has largely seen seasoned investors and younger founders dominating the sector. However owing a plethora of factors in the startup landscape such as Zomato’s IPO & accelerated pace of ESOP buybacks which created a new set of founders and investors the tables have turned.
In terms of founders, LetsVenture witnessed a rising trend of seasoned founders and serial entrepreneurs above the age of 30 applying to raise funding on the platform. Increased interest to invest in startups led to younger investors in the age group of 25-30 becoming angel investors.
Non-metro cities emerging as the hotbed for startups & metro cities for investors:
Compared to 2020, LetsVenture noticed a 57% increase in startups registering on the platform from non-metro cities and even surpassing their metro counterparts which stood at 52%. With increased accessibility, availability for capital and cheaper costs associated with a distributed workforce, work from anywhere has enabled startups from non-metro cities to compete with their metro counterparts owing to larger availability of talent and resources.
Compared to 2020, investors from non-metro cities recorded a 54% jump while from metro cities it was an 88% increase. Despite the massive influx of angel investors across India, the capital in non-metro cities remains largely untapped owing to the fact that a lot of aspiring angel investors from these cities are unaware of the processes on how to begin angel investing. Investor education and spreading awareness across these cities are key to enabling more investors from non-metro cities to angel invest.
SaaS remains investors apple of the eye while healthcare and fintech remain popular
With a rise in digitisation and adoption of web first tools, SaaS remains an investor favourite accounting for 23% of startups funded on LetsVenture. Other popular sectors such as consumer internet, marketplaces and more remained stable in terms of sectors funded.
Within healthcare and fintech, the following 3 sectors were popular with founders and investors.
In healthcare, the top 3 sectors were Health & Wellness, Healthcare Services & preventive/ diagnostic Healthcare technology.
In fintech, the top sectors were in wealth management and business finance.
New and seasoned angel investors ride the wave
On a YoY basis, LetsVenture witnessed a 75% jump in new angel investors with no prior experience in the same registering on the platform while the same figure for experience investors stood at 77%. 64% of the overall investors registered in 2021 were new to the domain while 36% had prior experience. With rising awareness and popularity for startups, LetsVenture expects that in 2022, new angel investors will surpass experienced investors.
More than half the startups reported early revenue traction
54% of startups who registered reported early and steady revenue streams. 46% were either at beta stage or proof of concept. Amidst the rising competition for funding, early revenue traction is a strong sign in the maturing startup ecosystem in terms of product-market fit and customer affinity.
Investors appetite for angel rounds
With a record number of investors registering this year, investor interest largely focused on angel rounds. 63% of investors expressed interest in participating in seed and angel rounds while 37% wanted to participate in growth rounds.
Singapore pips UK while the US remains a hotbed for angels US, Singapore, UAE, UK and Qatar were the top foreign countries from where angels registered on LetsVenture. On a YoY basis, there was a 10% growth in investors from US and a 43% growth in investors from Singapore.
Sunitha Ramasway, President, LetsVenture, said, “2021 was a watershed year for startups in India. Amidst the birth of 40+ unicorns in a single year, the early-stage ecosystem witnessed a massive influx of founders and investors. With Indian startups crossing $100 bn in funding by Oct, there has been a ripple effect across the ecosystem from the early to growth stage. Interestingly the capital surplus has led to younger investors coming into the fold(25-30 yrs old) while the average age of founders has increased to 30+. IPOs, exits and the government’s tightening control in China across sectors also led to a lot of US based investors sharpening their focus more on the Indian market”.
Sunitha also added “2022 holds a lot of promise for the Indian startup ecosystem. We expect to see the rise of more unicorns, more exit opportunities for investors, a surge in founders starting up and India attracting more interest from international investors.”
For the study, LV analysed data from over 7000 founders and investors in 2021(Jan-Dec) from around the world and India. The anonymized data was collected from founders and investors who expressed interest in the platform for fundraising or investment purposes respectively. The findings are a mix of qualitative and quantitative trends witnessed on the platform.
Source: Business World