Economy

Start-ups in woke areas struggle to find funding

Debangana Ghosh Mumbai | Updated on September 20, 2021

 

Air pollution, women’s hygiene, at-home medical testing, and pet care have been some of the most talked about subjects the last couple of years. Yet, despite these being so woke, deep tech innovations in areas like medical diagnostics, femtech, air pollution management, have been some of the least-funded sectors in the Indian start-up ecosystem.

In 2019, start-ups in these segments on an average raised only around $25,550 in one to two rounds excluding grants and debts, according to data accessed from Tracxn. Some of the innovative technologies developed by start-ups included devices for blood diagnostic tests, wearables for monitoring infants, devices for analysing proteins, screen cancer, managing Asthma and detecting cervical abnormalities; air pollution management and smart helmets.

In 2021 year-to-date as of September 13, the average ticket size of funding increased to $52,110 and included more sectors like robotic process automation and forestry tech apart from medical diagnostics. “For investing VCs, a few things are important. They need to witness month-on-month growth, they need to see actual monetisation opportunities available on the ground. Hence, in sectors which have longer gestation periods, where the monetisation plan is not yet figured out and consumer adoption at large scale is still a question, VCs tend to be a bit uncomfortable about investing in those,” Apoorva Sharma, Partner, Stride Ventures, told BusinessLine. Sharma pointed at the growth of agtech to give perspective. Traditionally, agtech was a very long gestation period sector, requiring a lot of on-ground grassroot level involvement.

“In the last two years, agri-tech has seen a lot of VCs investing and Ninjacart is likely to become the first unicorn in this space. It took longer for Ninjacart to come to this stage compared to other sectors,” Sharma explains.

Size matters

A lot of these differential figures in funding also depend on the size and growth prospects of the sectors. Higher the number of start-ups and consumers, more the funding raised.

Anup Jain, Managing Partner, Orios Venture Partners, told BusinessLine, “The femtech sector is new and growing in significance as more urban women are allocating a greater share of the wallet to health in general both for self and family. Post Covid, families and individuals have realised that they need to place a greater emphasis on health overall. This sector is bound to grow, just like in the US and other markets, to be one of the top sectors for funding within health in the next five years.”

 

Published on September 20, 2021

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