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Deep Tech, Gen AI and Climate Tech to be the big focus for early stage investors in 2024: Report
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The valuation for seed and ore-A rounds saw an increase in 2023 and 41% of deals were valued at more than $10 million, which is 20% higher than in 2022. About 45% of funding had a 100% domestic capital base compared to 20% in 2022.
About 77% of Indian investors expect higher deal flow in 2024 with a closer focus on DeepTech, Gen AI and Climate Tech. This, after early-stage investments, saw the lowest deal volumes in four years, but with increased ticket sizes and valuations, according to a report by leading venture lending platform InnoVen Capital.
According to the report, B2B platforms, consumer tech and AI saw the highest interest in 2023 and agritech, e-commerce and gaming saw slower deal activity.
“In 2024, we anticipate the early-stage funding environment to improve, with higher focus on emerging sectors like Gen AI, Deep Tech, and Climate Tech. However, investors will have a bias for sustainable business models, experienced founding teams and will do more extensive due diligence”, said Tarana Lalwani, Partner at InnoVen Capital India
The valuation for seed and pre-A rounds saw an increase in 2023 and 41% of deals were valued at more than $10 million, which is 20% higher than in 2022. About 45% of funding had a 100% domestic capital base compared to 20% in 2022.
Investors continue to bet on experienced founding teams. Close to 27% of investors made over 30% of new investments in companies with repeat founders compared to 20% in 2022.
The main reason for governance failures in startups over the last couple of years was insufficient oversight and monitoring by the board. “Over-indexing on being founder friendly, ignoring red flags, lack of a strong CFO and weak management teams were among the other key reasons cited”, said the report.
Early-stage deal flows continue to be the highest in Bengaluru and Delhi NCR, followed by Chennai, Pune and Hyderabad.
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