Non-Traditional Investors in Startups
With more and more startups mushrooming in India, everyone needs a higher dose of capital infusion, thus more number of investors are coming into the picture. Some of them may be classified as sovereign wealth funds, hedge funds, PE firms, and family offices. This was as per a data sourced from VC firm Sequoia Capital. Some of the prominent investors include Facebook, Ikea, and Qatar Investment Authority.
Some of the most renowned non-traditional investments can be elucidated as follows:
- Facebook invested in social commerce startup Meesho
- Ikea invested in home deisgn Livspace
- Qatar Investment Authority pumped in around US$ 150 million in ed-tech platform Byju’s
There have been several companies that started off as non-traditional investors that were very serious about investments. SoftBank is a classic example of the same. However, inspite of the number of startups increasing everyday, a recent report by TiE and Zinnov said that there is an increasing need to fund at seed and early stages.
Where is the Gap?
India is by far an undervalued and underpenetrated country, that has absolutely no dearth of a pool of talent and skill. However it is still lagging behind US and China, despite having a solid and robust startup ecosystem. The funding sector too has gaps. Industrial experts state that India gets 20x less funding than the US in Series A. Last year in 2018, India only had USD$4.1 billion pumped into Series A, as against US at a margin of USD$84.1 billion.
With around 17,000 startups in India, the demand for capital infusion is for sure bound to rise, and thus non-traditional investors could do the magic. However, startups must not leave an opportunity unturned to try to better themselves and try to do something disruptive, thus not following the herd.