Startup enterprises require a certain level of money for growth. Wealthy investors seek to put their wealth in firms with long-term development in mind. This funding is known as venture capital and the investors are termed venture capitalists. The venture capital investment is made when a venture capitalist buys shares of firms and becomes a financial partner of their company.
The Venture Capital investment is generally called as risk money or patient capital. This is because most VC investing capitals or rather a majority of them contain huge dangers of separating from the money invested if the enterprise doesn’t thrive. Besides, the funding flowing from the venture capital companies or the VC funds normally require a medium to long term duration for the investments to fructify.
The Indian companies got around $12.1 billion from the venture capital funds in the first 6 months of 2021, which is $1 billion higher than the whole money that they received last year. Venture Capital (VC) investment in India more than quadrupled from its previous quarterly record of $6.7 b in Q2 2021 to $14.4 billion during Q3 2021, according to a new analysis by KPMG.
Most of the $35 b sucked up by Indian entrepreneurs in the year 2021 came from VC finance for startups and private equity investments, which increased by three times over the previous year’s total. These funds are not only helping the businesses find it simpler to get financing but are also adding gear to the Indian startup ecosystem, hence making it a significant and rising entity in the global arena.
Therefore, seeking financing from venture capitalists is the way to go for the Indian entrepreneurs of presently.
Functions of Venture Capital
In the last five years, venture capital has played a vital role in starting the startup boom in India. They have effectively strengthened the Indian economy by developing a new paradigm of disruptive economic development. Many firms have become unicorns, rivalling the finest of India Inc, merely because of venture capital money.
Listed below are the numerous tasks provided by venture capital funds.
- Many startups and small businesses have access to capital and resources to begin product development as early as the pre-start stage thanks to VCFs. The primary goal here is to provide resources that will allow for widespread technological advancement.
- VCF is managed by a group of seasoned individuals who aid the company in formulating a business strategy. The company strategy focuses upon market potential, the product, the development and financial requirements.
- Apart from building a business strategy and giving money to achieve the same, venture capitalists also examine the merits/demerits of the technical invention. This enables for improved approaches to accomplish the corporate goals and effective administration of the technical innovation.
- Venture capitalist also have a broad network of other ventures across diverse industries. This is vital for a small firm when it comes to professional networking.
- Apart from giving financial help, Venture capitalists are actively engaged in delivering a wide range of expert services – technical, commercial, managerial, financial and entrepreneurial.
These are the top Venture Capital companies in India to watch out for:
- ACCEL PARTNERS
Accel Partners is one of the oldest venture capital companies in India with more than three decades in the startup ecosystem. Headquartered in California, this VC company has supported hundreds of firms and focuses mostly on internet technology companies.
The investment bracket at Accel Partners goes from $500K to $50 Million depending on the nature of the firm
Domain of Investment – Infrastructure, Internet, Mobile & Software and Consumer Services
Startups Funded – Freshdesk, Myntra, BookMyShow, BabyOYE, Flipkart etc.
- SEQUOIA CAPITAL
Sequoia Capital India is an affiliate of Sequoia Capital that is situated in California. This VC business specialised in startup finance at the early, seed and also in the growth stage with defined investment structure for each of these phases.
Investment Domain – Healthcare, Consumer Internet, Financial Sector and Technology
Startups Funded – JustDial, Zomato, Practo, Groupon etc.
- NEXUS VENTURE PARTNERS
Nexus Venture Partners is another name on the list of top venture capital firms in India to watch out for. They generally invest in small firms and startup in their early stages that distinguish in innovation and differentiability. Nexus Venture Partners may invest from $500,000 to $10 million.
Investment Domain –Infrastructure, Agribusiness, Consumer and Business Services, Data Security, Bio Data Analytics, Mobile
Startups Funded – Craftsvilla, Snapdeal, Shopclues, etc.
- KALAARI CAPITAL
Kalaari Capital is a reputable venture capital business in India created in 2006. They generally invest in technology-based startups and small companies in their early and seed stage. Kalaari Capital not only gives an acceptable money to businesses, but they also have a reputable advisory board to help new entrepreneurs with successful business solutions.
Domain of Investment – ECommerce, Internet, Curated Web
Startups Funded – Snapdeal, ScoopWhoop, Myntra, Urban Ladder, Instamojo etc.
- BLUME VENTURES
Blume Ventures, launched in 2011, is one of the leading venture capital companies in India that is referred to as the ‘Founder’s VC’. With over a decade’s expertise in startup finance, here they also give total assistance and coaching to such prospective entrepreneurs.
Blume Ventures has backed over 60 different entrepreneurs with intriguing concepts and enabled them to establish themselves in the competitive industry.
Investment Domain – Mobile Applications, Internet & Software Sectors, Telecommunication Equipments, Research and Development
Startups Funded – Cashify, TaxiForSure, HealthifyMe, Belong etc.
- CHIRATAE VENTURES
Chiratae Ventures (formerly known as IDG Ventures India) is a name that connects strongly with the venture capital market in India. They have an expertise of more than 15 years in startup finance with a portfolio of over 200 startups in diverse areas including Mobile, Engineering, Media & Technolgy and Health-Tech to mention the few. IDG Ventures funding range varies from $1 million to $10 million.
Investment Focus –Software Products, Technology-based Consumer Services, Mobile, Engineering-Medical Devices
Startups Funded – FirstCry, Yatra, Lenskart, Myntra, Zivame etc.
- VENTURE EAST
Venture East is investing since 1997 and is the longest-serving VC company in India. The fund managers are looking after $325 million plus investments in firms in the IT industry and scientifically based startups. Venture East has invested in more than 70 firms and the number is projected to only expand in the coming years.
Investment Focus –Digital Healthcare, Pharma & Life Sciences, Financial Services, Financial Services.
Startups Funded – eYANTRA, Goli Vada Pao, Portea etc.
- SAIF PARTNERS
SAIF Partners has been investing since 2001 and is one of the most successful VC companies in India. The fund managers oversee 400 Crores USD worth of assets. With offices in China and India, SAIF invests in entrepreneurs throughout their journey, from seed capital to high priced growth capital.
Sector Focus – Financial Services, Digital Healthcare, Consumer Internet, Logistics, SaaS etc.
Startups Funded – Acko, Chaayos, ClearTax, BookMyShow, Meesho, Aye etc.
- 3one4 CAPITAL
3one4 Capital is a potential venture capital business formed by the son-duo of the legendary investor Mohandas Pai. With more than 50 investments, 3one4 not only invests funds in new-age technologically driven firms but also supports founders with their main business difficulties.
Sector Focus – Media & Content, Health, Education, Fintech, Consumer Internet etc.
Startups Funded – Faircent, Licious, i2e1, Tripoto, YourStory etc.
- MATRIX PARTNERS
Matrix Partners is a US-based venture capital company that invests in seed and early-stage firms. The business has the attitude of being “Founders First” i.e. not only they invest funds in high-growth potential firms but also supports them in critical fields like recruiting, strategic collaborations etc.
Sector Focus –Consumer Internet, E-commerce, Entertainment and Media, SaaS etc.
Startups Funded –Housejoy, FIITJEE, Ola, mSwipe, Limeroad etc.
Benefits of Venture Capital
• Additional resources and contacts – Along with monetary help, VCs may work as HR advisors for the business. They are professionals in recruiting the finest workforce for your company. This aids in preventing the employment of the incorrect individual. It also provides a variety of other similar services such as mentorship, partnerships and skill training.
• Better Management – Since venture capitalists control a share of stock in the firm, they have a voice in the management of the business. So, if you are not competent at operating the firm, the VCs might give significant support.
• Business knowledge – Venture capitalists bring a wealth of commercial expertise, as well as a network of relationships, to the table. The experts are experienced professionals that have a deep awareness of particular business conventions, and they can shield your company against a number of common startup pitfalls.
• Firm growth – Venture capital offers big investment that a company needs to develop its business. This sort of investment is not available via bank loans or other techniques.
• Risk Aversion – In contrast to a bank loan, there is no obligation for a business promoter or creator to repay the seed money. Because the VCs believe in the company’s future success, they assume the financial risk.