ETSA 2021: Early-stage deal flow remains robust despite market volatility

Deal flows to early-stage startups remain strong, despite declining valuations of tech firms around the world since the start of 2022.

Many top-tier venture capital funds have shifted their focus to early stage investments and are trying to catch companies early.

Accel recently established a $650 million fund that will focus on early-stage investments. Sequoia is also focusing on early-stage startups with the launch of its seed accelerator program Surge.

Union Minister of Commerce and Industry Piyush Goyal said at the ET Startup Awards in Bengaluru on March 12, “In my view the funding should not go to Series B, C or D rounds, rather it should go to Tier 2 or 3 cities. as seed funding. ,

At the awards, policy makers along with some of the biggest names in startups discussed the future of early stage investments in domestic startups amidst the current volatility in the market.

“It is very difficult to predict where the market will be in the next 10 years but there should be no let-up in early stage investments. Shekhar Kirani, Partner, Accel India said, “Investors have to pick great founders and work with them to build reputed companies.

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Kirani said the entire startup landscape has changed in 2022, with many large investors focusing on early-stage funding.

“There are more extraordinary startups today. The quality of founders has improved significantly, the quality of ideas has improved greatly and the way founders build startups and create value for consumers has improved greatly,” he said .

Investors also talked about changing trends and changing round shape ratios for early-stage investing. The IPO rush in 2021 along with several policy changes has spurred early stage investments.

Anil Joshi of Unicorn India Ventures said, “While the pandemic has slowed things down, some policy changes and listing of companies have given a boost to early stage investors.”

Investors see digitization and crypto as the hottest sectors to invest in this year. “As a fund, we see a few areas that are quite prominent … digitization and the space around crypto and NFTs (non-fungible tokens),” said Joshi of Unicorn Venture Capital.

Kirani said Excel is focused on five broad themes and will continue to focus on them in 2022. “Consumer companies, B2B companies, marketplaces, global SaaS, fintech and digital health tech will be at the center of many disruptions,” Kirani said.

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Originally published at Pen 18