GSF India founded by Rajesh Sawhney has come out with
a report on ‘The State of Early Stage Investing in India March 2013’ which maps
the mood of investment ecosystem in the country for 2013. Based on a number of
reports and data, post GSF2012 held on Nov 26-27 the insights have been
prepared after interacting with VCs and Angels on their plans ahead for the
year.The report is co-authored by Rajesh Sawhney and Esha Tiwary, Chief Marketing Officer, Cloudnine.
Methodology - The insights presented here are based on
self-reported information by the opinion leaders and influencers in the early
stage Indian entrepreneurship ecosystem. The leading 40 VCs and Angels were
surveyed through a structured online questionnaire.
Investors interested in Non-ecommerce ventures :- The
investor sentiment seems neutral to slightly positive at best for 2013.
Investors are wary of ecommerce investments are keen on non-ecommerce sectors
in 2013. The only exceptions to this general outlook are Seed Funds, who are
extremely bullish and are contributing a significant chunk of early stage
investments in India.
Investments by VCs and Angels in 2012:-
In 2012, most VCs made less than ten investments and most
Angels restricted to less than five investments. In the deals that did happen,
a growing amount of participation by VCs in Seed rounds was observed. In fact,
there was more Seed level participation than Series A participation by VCs (in
number of deals).
VCs and seasoned Angels investing across stages and are
collaborating in deals:-
The report further states that 2012 witnessed both Angels
and VCs investing across “stages”. In fact, a growing collaboration between
Angels and VCs further corroborates this paradigm shift. 61% of Angels surveyed
said there was greater collaboration in 2012 than in 2011. They sense that this
collaboration will keep increasing as VCs continue to move down the “value
chain” of investing.
Amongst the VC deals of 2012, 42 percent are of Seed funding
followed by Series A (36%), Series B (12%) and higher (11%). In respect to
angel deals, seed funding was the top most category with a whopping 79% share
followed by Series A (15%) Series B (6%).
Lack of exits :- The report noted that lack of exits/ insufficient exit
options is the key concern for VCs and seasoned angels. Angels saw very few
exits in 2012 while VCs had strategic divestments forming the bulk of their
exits in 2012 a little over 60 percent. They expect this lull to continue in
2013, with strategic exits remaining the vast majority despite their
sub-optimal returns.
The report concludes by mentioning building of
mobile internet with 3G and 4G network rollouts. New Angel investors are
providing fresh capital to early stage startups (while seasoned ones are
becoming weary, as our survey reveals), and a few accelerators and incubators
have announced aggressive plans for 2013.