There are indications that investors are now cautious about
putting their money in new ventures
With insufficient capital available, startups are going
hungry. Only 8.3 per cent of them are successful in getting funding, said
Thillai Rajan, Professor, Department of Management Studies, Indian Institute of
Technology- Madras, releasing the India Venture Capital and Private Equity
Report 2016, titled ‘Inspiration and Momentum for the Gladiators’ at TiECON
2016.
“Odds of success for getting funded continue to be low. In
our estimate, for every 875 startups that get founded, only one is able to
successfully raise 4 or more rounds of funding,” Mr.Rajan said.
Out of the total start-ups that get founded, about 6 per
cent take part in an accelerator or incubation programme. A total of 75 of the
875 are able to get first round of funding, only 15 get second round of funding
and 5 are able to secure the third round of funding.
Industry experts say that investors are getting more
cautious when it comes to putting their money in startups and picking up
stakes.
According to Prof. Thillai Rajan, who co-authored this
study, investments in startups during 2005 to 2015 are estimated to be around
Rs. 1, 11,700 crore. The annual growth rate in investment flow was 42 per cent
and over 10,000 start-ups have received funding.
Read the complete story in The Hindu.