Local startups are upbeat about fundraising prospects in the coming months, even as the funding winter chill persists with seed investments falling to a seven-year low, according to a survey by venture capital firm Elevation Capital released Friday.
Nearly half of the more than 250 startup founders surveyed said they expect the funding freeze to thaw in the coming months, allowing them to expand their runways. Track refers to the period over which a company’s cash balance would last at its current level of spending.
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According to Elevation Capital, a backer of startups like Meesho, Sharechat, Spinny and Acko, about 66.5% of founders surveyed currently reported a track of at least one year.
ET reported on December 9 that funding to Indian startups sank in calendar year 2023 to $7 billion, less than a third of the estimated $25 billion received a year earlier, according to industry data. This marked a seven-year nadir for the ecosystem since 2017, amid a worsening global macroeconomic environment.ETech
Elevation Capital’s “Founder Pulse” report highlighted profitability as an important area of focus for startup founders, with 18% already reporting profitability and an additional 58% aiming to achieve profitability in the future “This indicates a concerted move towards greater financial sustainability and economic improvement within India’s startup ecosystem,” the report said.
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To achieve sustainable profitability, the founders are implementing cost-cutting measures and streamlining operations. About 38% of respondents have reduced their marketing expenses, while 20% of startups have reduced expenses related to engineering and product development.
“Amid the recent challenges facing the startup ecosystem, founders have experienced a deep learning curve. Confidence in India’s narrative and strong economic fundamentals have never been stronger. Founders they are emerging more resilient and wiser from these challenges, reinforcing positive changes in funding, talent acquisition, profitability and liquidity events,” said Mridul Arora, Partner, Elevation Capital.
The founders surveyed represented a variety of industries including software as a service (SaaS), artificial intelligence (AI), consumer brands, consumer technology, fintech and financial services, among others.
According to the report, 45% of founders in the consumer sector also reported the challenge of effectively managing cash burn as a major concern after revenue growth, while most B2B and SaaS founders are addressing complex sales cycles.
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