We have seen the term ‘funding winter’ building momentum across last year: as global recessionary trends increased, India also saw a decline in startup funding and deals by VCs (charts below from ET Prime).
This slowdown in fund inflows led to a sharp drop in the number of new Unicorns – from 41 in 2021 to 20 in 2022 and to a tightening of belts across startups.
However, for us at YourNest, the funding winter heralds good news: our own fundraise saw unprecedented traction, and YourNest Innovative Products VC Fund III is headed towards oversubscription. This has been made possible by the continued trust reposed in us by existing and new investors, including several Indian and global Limited Partners (LPs).
It has also been a season of opportunities: with more ‘dry powder’ or funds available and valuations coming under pressure, we will be investing from a strong position of liquidity to invest in startups at attractive entry valuations. For entrepreneurs too, this is the best time to start a venture as they will have more flexibility to establish a product-market fit with less competition. Availability of skilled talent at a reasonable cost is also an upside in these times.
Keeping this in mind, we continue to strengthen our own team with processes and metrics benchmarked against global VCs to power our growth. Our reach has extended to all major incubators pan-India where our teams are being regularly invited to evaluate early-stage startups.
As we enter the spring of 2023, I remain optimistic that we will see more investments and exits at attractive valuations this year. In the words of the 19th century English poet, Percy Bysshe Shelley, “If Winter comes, can Spring be far behind?”
Sunil K. Goyal
Managing Director & Fund Manager
January 25 2023