Investors race to win early-stage startup deals in India – TechCrunch

India could fight with the second wave of the coronavirus, rising unemployment and a dwindling economy, but the South Asian nation’s burgeoning startup ecosystem has never had it better.

High profile investors in India have long been aggressively pursuing growth and late stage businesses, and record amounts of capital have flowed into the country. But as a sign of investors’ growing optimistic attitude towards Indian startups, even early-stage companies that have largely been deprived of similar attention in recent years are now in the spotlight.

More than 70 early-stage Indian startups are currently in advanced talks to raise funds, according to sources familiar with the matter. Investments vary from a few million dollars to 100 million dollars. TechCrunch covers some of the more notable deals today.

The usual caveat that many deals are not yet closed and that their terms may change or the talks may not result in an investment applies to our reporting. The deals described below have not yet been reported.

Sequoia Capital India, the country’s most prolific investment firm, is in talks to raise capital in over two dozen Indian startups, including Register book, a company that runs an accounting app of the same name; Vah Vahwho runs an app to educate people about make-up by artists; SaaS platform Bamboo box, and email marketing software providers MailModo.

The company is also in talks to join the venture fund Nexus, OneCode, a startup that runs an app to connect digital-first brands with sellers. Sequoia Capital India, which launched a special fund for early stage startups called Surge two years ago, is also in talks about investing authorize, an app that rewards users for sharing their opinions; and rattle.

Vaibhav Domkundwar, who heads Better Capital, said the startup scene in India has never been so hot.

“The dynamics of the pre-seed and seed phases are at their peak, but we are now also seeing preventive rounds on the As and Bs series,” he told TechCrunch.

Domkundwar, who has supported over 140 startups including Khatabook and neobank Open, attributed some excitement to the new generation of founders in India who he believes are building product and sales driven businesses. “We’re seeing the fastest pace of investment in these teams,” he said.

Another investor, who requested anonymity, said founders are able to raise for the second time on a deck or notion document from elite anglers, unicorn founders, and microVCs. The pace at which these founders can close the deal is “breathtaking,” said the investor.

The hectic pace of investing in early stage deals comes as many of the more mature bets in India have become unicorns and many established startups are finally entering the public markets.

India gave birth to 14 unicorns this year, up from 11 last year and just 6 in 2019. High profile investors like Tiger Global and Falcon Edge Capital have stepped up their focus on India this year, gaining founders with their big checks, access to resources and fast turnaround times.

Many established companies are now chasing early-stage deals.

GSV is in talks about investments wire, a startup that runs a tutor app of the same name; and payment batch startup Inai has completed a new round of Better Capital and others and will be part of the next batch of Y Combinator. (Speaking of which, the previous batch of Y Combinator contained the largest cohort of Indian startups in history.)

One-year startup BrightCHAMPS, which has developed a programming and math platform for children, is currently in talks with GSV and Tiger Global to raise approximately $ 70 million.

India gold, a startup giving people in the South Asian nation access to credit against their gold reserves, is in talks to complete a new round with two high-profile overseas investors who have traditionally supported growth and late-stage transactions.

Germany’s Razor Group is in late-stage talks about investing in Upscale, a startup trying to replicate the Thrasio model in India.

Fintech investor RTP is in talks about investing Fleek, a startup that is building “a payment system for the subscription economy”. Falcon Edge’s AWI is in talks to invest in a fitness subscription platform Ultrahumanwhile SaaS platform AccelData was approached by Bessemmer and WestBridge.

For high-profile investors with billions in dry powder, there are many rewards for discovering a promising startup in the first few years. One can buy a much larger stake in a startup at lower prices before the startup’s valuation skyrockets, provided things go well. Investing early also reduces the amount an investor can lose if things lag behind with the portfolio company.

But not everyone is satisfied with the new dynamic.

An investor with a microfund told TechCrunch – on condition of anonymity, speak openly – that the involvement of larger investors in early-stage deals has made it more difficult for smaller companies to find new deals as the larger investors are now aggressively trying to complete whole rounds yourself.

The investor said there is now additional competition in the market: groups of high-profile founders who tend to jointly support startups.

The investor previously quoted in the story referred to these investments as “optionality checks”. These optionality checks – which are usually second-time or first-time founders who have previously worked at a Unicorn or Soonicorn – started with the Series A crowd like Sequoia Capital India, Matrix, Lightspeed India Partners, he said. Well, according to the investor, Tiger and Falcon / AWI are doing the same.

There are two implications of these optionality checks, the investor said. “They make life harder for micro-VCs / seed VCs because they can’t compete with the Tigers or Falcons or Series A funds, who can cancel” smaller “checks with impunity and perhaps even water them down less.”

But the investor cautioned the founders who conduct such optionality checks. “If the same fund doesn’t support them in the next round, the negative signal can jeopardize their chances of raising capital with other VCs. Second, the excess money they receive can sometimes lead to faster expansion and higher spending.

A survey by InnoVen Capital, the results of which were released on Thursday, found that over 80% of the investors surveyed said their deal flow for early-stage startups has increased this year compared to last year.

Over 75% of respondents in the same survey indicated that recent store ratings are on the “higher side” due to “intense competition for high quality stores and the entry of large established VCs in the space”.

Lightspeed India Partners, known for its investments in Unicorns Oyo Rooms and Udaan e-commerce platform, is in talks to support it vegetables, a startup that works with farmers;, which runs a tool of the same name that helps developers add video conferencing capabilities to their apps, as well as help with edtech startup Kalaam Labs.

second, which is building a “stripe for live video calls,” is in talks with Nexus and Sequoia Capital India. Elevation Capital, which is also in talks about an investment VeGrow, approaching an investment in FamPay, which offers credit cards for teenagers valued at approximately $ 150 million. Chiratae Ventures, based in Bangalore, is in the final stages of investing in talks AeroLeap and analytics startup

Fan play, a platform for social media influencers to monetize via mobile games, has already been collected by several American microVCs, but the round is not over yet. Due diligence and monitoring platform headquartered in Mumbai Mumbai warning was approached by “several investors”, but has not yet concluded the round.

Trading signals provider Tradex is in talks to raise Leo Capital. Audio social media app Frnd, Radio and podcast aggregator app Kuku FMand plant management platform Bharatagri are also in advanced talks with investors to raise capital.

Plug and play payment provider Map91 was approached by several investors, but has not yet concluded the round. Tournafest has completed a round of a number of angel investors, and so have Just eat and Stick size. Kosch has raised from YC and VentureSouq, among others.

Tech veteran Nandan Nilekani’s Fundamentum is in talks to provide support wise, which operates a business-to-business marketplace for trading agricultural commodities, and a supply chain startup Reshamandi.

“Early-stage investing has proven resilient despite the pandemic, with larger transaction sizes and higher valuations, a clear sign of a maturing early-stage ecosystem,” said Tarana Lalwani, senior director at InnoVen Capital India.

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