search engine optimization: Startups expect fundraising prospects to improve in coming months: report

Nearly half of the more than 250 startup founders surveyed said they expect the funding freeze to thaw over the coming months, allowing them to extend their runways. Runway refers to the period for which a company’s cash balance would last at its current level of expenditure.

As per Elevation Capital, a backer of startups such as Meesho, Sharechat, Spinny and Acko, around 66.5% of the surveyed founders currently reported a runway of at least one year.

ET reported on December 9 that funding to Indian startups plunged in calendar year 2023 to $7 billion – less than a third of the estimated $25 billion received in the previous year, according to industry data. This marked a seven-year nadir for the ecosystem since 2017, amid a worsening global macroeconomic environment.

Elevation Capital’s ‘Founder Pulse’ report highlighted profitability as a major focus area for startup founders, with 18% already reporting profitability and an additional 58% aiming to attain profitability in the future. “This signals a concerted move towards greater financial sustainability and improved economics within the Indian startup ecosystem,” the report said.

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Since late 2022, when central banks worldwide started raising interest rates and risk capital investors pulled back investments, startups have been in a cost-cutting mode to extend their runways, not knowing when they will be able to raise funds next.

To attain sustainable profitability, founders are implementing cost-cutting measures and streamlining operations. About 38% of respondents have scaled back their marketing spends, while in 20% of startups, expenditure related to engineering and product development has been reduced.

“Amidst the recent challenges faced by the startup ecosystem, founders have undergone a profound learning curve. The confidence in India’s narrative and strong economic fundamentals have never been stronger. Founders are emerging more resilient and wiser from these challenges, reinforcing positive shifts across funding, talent acquisition, profitability and liquidity events,” said Mridul Arora, partner, Elevation Capital.

The surveyed founders represented diverse sectors such as business-to-business (B2B) software-as-a-service (SaaS), artificial intelligence (AI), consumer brands, consumer tech, fintech, and financial services, among others.

According to the report, 45% of ffounders in the consumer sector also reported the challenge of effectively managing cash burn as a significant concern following growth in revenue while a majority of B2B and SaaS founders are addressing complex sales cycles.

Nearly half of the more than 250 startup founders surveyed said they expect the funding freeze to thaw over the coming months, allowing them to extend their runways. Runway refers to the period for which a company’s cash balance would last at its current level of expenditure.

As per Elevation Capital, a backer of startups such as Meesho, Sharechat, Spinny and Acko, around 66.5% of the surveyed founders currently reported a runway of at least one year.

ET reported on December 9 that funding to Indian startups plunged in calendar year 2023 to $7 billion – less than a third of the estimated $25 billion received in the previous year, according to industry data. This marked a seven-year nadir for the ecosystem since 2017, amid a worsening global macroeconomic environment.

ETtech

Elevation Capital’s ‘Founder Pulse’ report highlighted profitability as a major focus area for startup founders, with 18% already reporting profitability and an additional 58% aiming to attain profitability in the future. “This signals a concerted move towards greater financial sustainability and improved economics within the Indian startup ecosystem,” the report said.

Discover the stories of your interest

Since late 2022, when central banks worldwide started raising interest rates and risk capital investors pulled back investments, startups have been in a cost-cutting mode to extend their runways, not knowing when they will be able to raise funds next.

To attain sustainable profitability, founders are implementing cost-cutting measures and streamlining operations. About 38% of respondents have scaled back their marketing spends, while in 20% of startups, expenditure related to engineering and product development has been reduced.

“Amidst the recent challenges faced by the startup ecosystem, founders have undergone a profound learning curve. The confidence in India’s narrative and strong economic fundamentals have never been stronger. Founders are emerging more resilient and wiser from these challenges, reinforcing positive shifts across funding, talent acquisition, profitability and liquidity events,” said Mridul Arora, partner, Elevation Capital.

The surveyed founders represented diverse sectors such as business-to-business (B2B) software-as-a-service (SaaS), artificial intelligence (AI), consumer brands, consumer tech, fintech, and financial services, among others.

According to the report, 45% of ffounders in the consumer sector also reported the challenge of effectively managing cash burn as a significant concern following growth in revenue while a majority of B2B and SaaS founders are addressing complex sales cycles.