V Premnath, director, Venture Centre, feels that 2018 saw investors showing an interest in investing in startups, “rather than just India execution plays”.

“That said, the majority of investments (by value) were in sectors where there is no technology innovation, but mostly business process innovation and execution challenges (IT-enabled businesses such as food delivery, education, commerce),” is Premnath’s view.

While IT draws the maximum attention of investors, early stage investments in non-IT enabled sectors have primarily been in healthcare products, mechatronics, IoT and certain agro and social innovation sectors. “This is being driven by seed funds associated with incubators, angel investors and impact investors,” says Premnath.

“Traditional models of financing are happening in energy and environment sectors and in late stage deployment of solutions. Since not much investment is happening in the early stages of tech development, this startup pipeline for investors is likely to be weak in the coming years,” is his view.

Emerging opportunities

IT enabled services/ sectors (commerce, food delivery, ride hailing, education, agro, finance, payments ) will continue to draw the largest funding. The coming year will be good for healthcare product startups.

Cyber security should throw up new opportunities for India.

One can see a boom in waste management companies. Since funding in this sector is a problem, large players with strong balance sheets will eventually dominate and probably squeeze out startups and first generation entrepreneurs.

If the government of India creates a vehicle like Birac for other sectors, a pipeline for future investments can be created that will boost knowledge-intensive and IP-rich startups. This will further create good candidates for investment three years hence.

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Not hopeful about early stage funding in energy and environment sectors.

The focus on startups will reduce in the election year of 2019. The government will focus more on rural areas and probably de-emphasise startups.

Challenges

First generation entrepreneur interest and availability of financing always go hand-in-hand. Lack of early stage financing to spur startup creation and empower first generation entrepreneurs is still limited to only very few sectors in India. That remains the greatest challenge.

The funding landscape is not continuous in India and has gaps. Which means that Indian startups will either:

a) raise money from foreign funders, or

b) move overseas to raise money.

This is especially likely in knowledge-intensive areas where the appetite for Indian investors has been low.

Again a missed opportunity will be inability of the Indian ecosystem to draw upon academia and R&D institutions for new technical capabilities seamlessly to build new technologies.

The year in funding: which Pune startups raised how much, and from whom

Indian venture capital (VC) fund Iron Pillar has invested an undisclosed amount in Pune-based Sedemac Mechatronics, which specialises in manufacturing powertrain controls, which are critical components that are used to help generate power in automotive vehicles.Details of the growth-stage investment — the stake size and the exact amount invested — were not revealed. However, in conversation with Inc42, Sameer Nath, managing partner at Iron Pillar, he said that the funding amount was between $5-$8 million, an amount that falls in the usual range of cheques Iron Pillar issues.

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Pune-based healthtech startup SynThera Biomedical has raised an undisclosed amount of seed funding from 1Crowd and the government’s Birac (Biotechnology industry research assistance council) scheme via Venture Centre. Birac’s Seed – Sustainable entrepreneurship and enterprise development – scheme was set up to support life science startups

Villgro, the social enterprise incubator, recently announced a seed funding of over Rs 3.5 crore to help social enterprises. Villgro’s iPitch, a national discovery programme, has shortlisted nearly 12 enterprises through which it unearths the most innovative and impactful for-profit social enterprises across India.


First Published: Dec 29, 2018 15:12 IST



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