A Year Of Entrepreneurs Creating Future
It’s a wrap!! And with that, the 2023 season comes to an end.
It was a year that seemed to stand still for fundraising. Macroeconomic forces limited capital flows that had previously fueled India's burgeoning startup ecosystem. Money raised by startups plummeted to just $7 billion, a mere 18 per cent from the peak in 2021. Let's picture what that means -- a mere 8 years back in 2016, about 5,000 startups jostled for the $5 billion of VC money invested in India. Last year, over 100,000 startups vied for about $7 billion of VC money. A fight for survival!
If we were to dub a theme for the year, it would be resilience. While external capital was scarce we saw entrepreneurs do more with less. With a laser focus on customers, some entrepreneurs were able to cut through the fluff and hone in on what matters--profitable customers. It was also the year of bridge rounds… with sliding valuations very few investors were willing to put their neck out and many entrepreneurs were not ready for the cuts from the heydays of 2021. The solution -- convertibles to keep going. Not all investment areas fell out of favour -- climatetech, fintech in B2B and deeptech continued to see investments. And, of course, the Indian economy continued to thrive in a turbulent world clocking over 7 per cent growth making it a destination to reckon with in capital heavy conference rooms across the globe.
Gen AI & Deeptech
We believe there are two threads for 2024 and beyond. The decade-old Gen AI investments are bearing fruit and more readily available to everyone--this next wave of digital companies will leverage this moving beyond ‘digitalisation’ to create the deeper profit pools while offering low-cost solutions to the large value-conscious markets of India and beyond.
The second lies in disruptive deeptech products. We are at an interesting juncture where the intersection of computational advances with the complex world of biology and materials opens up limitless possibilities. Whether it is for therapeutics or transitioning to biological manufacturing or discovering materials, this unlocks a whole new way to discover and produce things. Increasing interests from stakeholders (entrepreneurs, investors and governments), increasing pressures from climate, food and health needs and a plethora of experiences in India from software and pharma provide the tailwinds for this to gain legs in 2024.
Looking back means wondering what’s next. There are enough trends that point to a recovering global economy--slowing inflation, outstanding growth predictors for India, reducing interest rates, etc. But then again, there are enough trends that can take us elsewhere – global conflicts that promise to escalate, ‘Japanification” of the Chinese economy, unpredictable elections in critical geographies and many more. But one thing is clear--2024 will continue to create entrepreneurs who are there to create the future and not opportunistic funders and entrepreneurs. This is the environment where real entrepreneurs disrupting the world with real solutions thrive. We look forward in 2024 to backing these entrepreneurs who see the potential of these crazy ideas to create a storm.
Ritu Verma, Co-founder & Managing Partner, Ankur Capital
