Investors are now becoming thoughtful before making an investment in the start-ups.
Professor of Department of Management Studies, Indian Institute of Technology- Madras, Thillai Rajan says that there are only around 8.3% new ventures that successfully get funded because of insufficient funds and he released the India Venture Capital and Private Equity Report 2016, bearing title ‘Inspiration and Momentum for the Gladiators’ at TiECON 2016.
According to their reports, Rajan said, only one from the 875 start-ups that are started can manage to get atleast four rounds of funding.
There are 6% start-ups that take up incubation or accelerator programme and around in the 875, 75 manage to get the first funding, 15 make it to the second round and 5 drag to the third round of funding.
Rajan, who was a co-author in the study, said that start-ups between 2005 and 2015 was estimated to Rs 1, 11,700 crore. There was a 42% annual growth rate with more than 10,000 start-ups being funded.
Between 2008 and 2015 there has been an annual average growth of 124% in the country shown by Angel deals. Angel deals have helped in increasing the annual growth rate of 205% in the estimated amount invested from 2008 to 2015. There has also been an increase in the investors of Angel deals which has risen to 107% annually on an average.
Rajan, also pointed out in the steady decrease in the average age of the start-up when angel investment started funding in 2008 which was 4.77 to 0.54 years in 2015. When the start-ups received funding from angel their age was the highest at Chennai when compared to other big cities.
Senior Charter Member of TiE Chenna and Vice Chairman of Cognizant, Lakshmi Narayanan said that investment got from an angel by a start-up has gone up, in 2009 the amount funded was Rs.10.63 million which has gone up to Rs. 46.76 million in 2015. An average angel investor now invests Rs. 16.95 million which was Rs.2.15 million in 2009.
About two-thirds of angel’s funding goes to six tier 1 cities which is around Rs. 661.29 billion, tier 2 cities got 306 billion while tier 3 cities were funded with Rs. 19.74 billion.