While the overall startup funding scenario has taken a hit this year, investments in seed-stage startups are seeing less impact as compared to late-stage companies, said Rishab Malik, partner-seed investments at Jungle Ventures, in an interaction with FE.
“I think there has been an impact at the seed stage, but definitely not as much as the later stages,” Malik said, adding that Indian financial markets have largely done well and there is liquidity in the system for people who have large holdings in the public markets to be able to liquidate and deploy that in private markets.
Tracxn data showed that 372 startups raised seed investment in the first half of this year, more than double the number of early stage and late stage rounds combined. However, the average ticket size of seed rounds has taken a significant hit this year, falling to $315 million from $1.1 billion in the same period last year.
“So if a founder could start out with $1 million or $1.5 million a couple of years ago, we are seeing founders starting with up to half a million or $750,000 as a seed round,” Malik said. “Today, seed valuations are down 30-40% from 2021 and they seem a lot more attractive and reasonable for us as investors,” he added.
Singapore-based Jungle Ventures invests in early to growth stage startups and has companies such as Livspace, Leap Scholar, BookMyShow and more in its portfolio.
The firm has recently launched a program for early-stage startups, where it plans to invest a minimum of $2 million divided equally in equity and convertible notes. So far, the program has seen about 500 investment proposals from markets such as India, Singapore, Vietnam, and Indonesia.
Talking about the sectors which are presenting strong investment opportunities at early stages, Malik counted B2B commerce, consumer brands and software-as-a-service companies among them. The firm recently led a $6.5 million pre-series A round in Showroom B2B, a supply chain platform for garments.
“I think the thinking behind good founders is that while overall market conditions might be a little bit challenging, they are building for two-four years ahead, so by the time they reach those growth stages, hopefully the market would have improved and availability of capital will be there,” Malik said.
