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The raging pandemic may have taken its toll on the lives of people, but it does not seem to have affected the business sentiment among early stage start-up founders and investors. Around 89 per cent of start-up founders, from sectors such as DeepTech, SaaS, Fintech, Consumer brands, Social Commerce and AgriTech, are bullish about near-term growth, reveals the India Sentiment Outlook survey by 100X.VC, an early-stage venture fund. The survey is based on a sample size of 275 early stage start-up founders and 77 early-stage investors in the January-March quarter of 2021.

“Over the past year, we have seen the Indian start-up segment giving a strong pushback to the Covid-19-induced market landscape. We believe that the optimistic outlook of both start-ups and investors, as seen in the survey results, is an encouraging factor. It will give rise to more innovation and creativity to help the market and our nation at large” said Sanjay Mehta, founder and Partner, 100X.VC.

Growth prospects

Forty seven per cent of the start-up founders said they were experiencing growth at present, while another 42 per cent expected the same in the next six months. Twenty eight per cent of the founders revealed that their valuations have increased in the Januaryto March quarter of 2021, while 41 per cent of them expected it to increase in the near term; 19 per cent reported no change, while 6 per cent felt it has decreased or is about to decrease.

Early-stage ventures planning to raise funds in the next six months stood at 88 per cent, of which, 64 per cent said funds will be raise in three months and 24 per cent said it will happen within 4-6 months. Only 4 per cent of start-up founders were not raising funds in the near future; 8 per cent expected to do so between 7 months and a year. It came as a pleasant surprise that over 40 per cent of start-ups saw no change in their fundraising plans.

Angel investors and individual investors (34 per cent) topped the charts in terms of source of funding for start-up founders. Micro-VCs stood next at 21 per cent, followed closely by Venture Capital firms at 18 per cent. Angel network syndicates (13 per cent), Private Equity (4 per cent), and Family Offices (3 per cent) were also mentioned as a source of funding, alongside others. Founders were also asked how much time it takes to close a deal and receive capital after the term sheet was signed. A majority (69 per cent) claimed that it takes anywhere between 1-4 months compared to 3-6 months previously; 11 per cent of the respondents said less than a month, whereas 20 per cent also said it took more than 4 months.

Investor sentiment

Around 70 per cent of all investors surveyed said that they were seeing business growth, whereas 23 per cent expected it in the coming months. Sixty eight per cent were also asking their portfolio companies to be more aggressive, while 30 per cent were prompting them to maintain the status quo. In terms of unicorns, 40 per cent of the investors felt that there would be 75-100 unicorns in India by 2025; 35 per cent believed that the figure would cross the 100-mark, and 25 per cent of them were unsure. In 2021-22, nearly two-thirds (65 per cent) of investors believed that there will be a spate of IPOs of Indian start-ups across stock exchanges; 19 per cent of them also held the opposing view while 16 per cent were unsure.