Antler India expects record deal volumes next year, suggesting early-stage funding recovery could be two years from now

“We plan to close about 40-50 investments next year, which will take our total portfolio in India from this fund to 130-140 items. “Now is a good time to invest in the pre-seed category as we are seeing more traction in the sequential stages, which was not the case last year. “

The venture capital firm closed 30 investments in 2024, the most to date, and Srivatsa added that the investment firm expects to close more deals before the end of the year. By comparison, it made about 22 investments last year, fewer than 10 in 2022 and 13 in 2021. Its $75 million debut fund currently invests in areas such as artificial intelligence, consumer technology, fintech, deep tech, health and climate.

Aakash Agrawal, deputy director of digital and new age business at Anand Rathi Investment Bank, said that while total private investment in startups in 2024 will remain consistent with 2023, it will still be almost half of the peaks in 2021 and 2022.

“Worryingly, while seed and pre-seed rounds are witnessing activity, the pace of Series A and Series B rounds has slowed down, making the journey for these seed-stage startups somewhat complicated as they typically have There is less capital to raise money to develop a product or service as growth-stage investors are patiently waiting for dry powder and looking to deploy it at their leisure,” Agrawal said.

Srivatsa did not specify the amount Antler India will invest next year. Antler India, which focuses on the pre-seed stage, has seen its average investment increase from $175,000 when it launched three years ago to $250,000. Srivatsa said that in 20% of cases, with the exception of 20%, the company had its global funds invest with larger checks.

The venture capital firm led an $11 million Series A round in July for ride-hailing platform Namma Yatri, along with firms such as Blume Ventures. Antler India’s other investments include fashion retail marketplace Bizup, ready-to-eat meals Freshcon and Inamo, which manages quick commercial dark stores.

Antler India, along with Nitin Sharma, a partner at the firm, began looking to raise $30-40 million in funding in October 2021 to invest in 75-80 startups. As the ecosystem grows, venture capital firms decide to raise larger funds to capture market opportunities.

Pay attention to valuation

Nearly 40% of the fund’s capital is earmarked for follow-on financing of portfolio companies. The time between the initial inspection and the next round of inspections is typically six to nine months, Srivasa said.

Srivatsa explained that over the past year, the market has experienced deep corrections across stages, with startups increasingly focusing on valuation growth. He emphasized that capital is being allocated more selectively and companies are more focused on achieving frugal growth with lower cash burn rates than during the pandemic, when funding was more readily available.

Some 760 investments are in the seed stage this year, compared with 1,273 in 2023 and 1,751 in 2022, according to market intelligence provider Tracxn. Even deal volume at the Series A and B stages is down significantly this year from the levels of the previous two years. Still, there has been an increase in some later stages, but still below 2022 levels.

“Many companies are still not meeting realistic valuation metrics, and expectations are different now. While there may be 20% more funding this year compared to 2023 (one of the worst periods), the transition is still very slow,” Srivatsa said, adding that valuations are more reasonable in the early stages.

Apart from India, Antler has operations in the United States, Middle East and Africa, Europe and Australia, Indonesia, Japan, Singapore, Vietnam and Malaysia. Almost every country has its own fund, with Antler Global Fund committing about 15-20% of the capital.