InnoVen Capital Startup Outlook Report: More funding in 2021

Commenting on the report, Ashish Sharma, CEO, InnoVen Capital India said in a statement, “The year 2020 was an eventful year for the venture ecosystem. The COVID-19 outbreak led to a perfect storm, with demand destruction, supply chain disruption and funding market dislocation. However, the resilience of entrepreneurs meant that startups navigated this crisis rather well and many companies have come out stronger.” 

Funding In 2020, 54 percent of founders had a positive fundraising experience, while 24 percent claimed otherwise. Close to 23 percent of founders did not attempt to raise funds. The favourable fundraising experience was down from 75 percent in 2020 to 21 percent in 2021 and was driven by COVID-19 related disruptions.  An overwhelming 71 percent of founders believe that the fundraising environment will improve in 2021. The report added that founders chose ‘ability to do follow-on funding’ and ‘strength of institutional brand’ as the top two factors while choosing a lead investor. The ‘ability to follow on funding’ factor gained in importance – it was up from 15 percent in 2020 to 25 percent in 2021. Only 14 percent of founders selected ‘commercial terms’ as most important.

Over 77 percent of founders ranked growth higher than profitability as a focus area for 2021, which is largely consistent with prior year. Close to 42 percent of startups aim to turn earnings before interest, taxes, depreciation, and amortization (EBITDA) profitable in two years, while 29 percent aim to reach there in two to four years.

“Two thirds of surveyed founders mentioned that they were above the pre-COVID-19 revenue run-rate in December 2020. Ecommerce, logistics (express), B2B platforms, enterprise software, and D2C brands saw the strongest recovery,” the report stated.

However, close to 47 percent of founders believe that IPO is a likely mode of exit while 28 percent believe M&A as the likely exit option. Close to 70 percent of growth and late-stage founders have aspirations to go public in the future. Overall, the trend-line of IPO preference has gone up from 39 percent in 2019 to 43 percent in 2020, and is at 47 percent currently.

Report, Ashish Sharma, CEO, InnoVen Capital India

Read more at:

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s