In August, Indian startup’s raised over $995 million in Venture Capital. According to statistics and analytics company, Globaldata, the amount raised this month is 9.7% higher than it was the month before.
Aurojyoti Bose, lead analyst at Globaldata said that, despite a 2.3 percent drop in deal volume, the total VC funding amount managed to reverse the dip in August, although it stayed below $1 billion as it did in July.
According to the sources of the company, from January to August 2022, 1239 VC funding agreements were announced in India. Compared to the $17.7 billion announced fundraising amount from the same period last year.
There has been a lot of economic uncertainty in the past years but Bose said that the Indian startups manage to secure investors’ confidence despite the fluctuations and as the cyclic phenomenon of the funding winter suggests, India had a slight month-over-month uptick in VC investment in August.
What is VC funding?
Venture capital is a sort of financing that investors offer to start-up enterprises and small businesses that they believe have long-term growth potential. The money of various investors is pooled together and then invested in these ventures. Funding is necessary to establish a new business endeavor or to launch a new product in the market. There are numerous other ways of raising funds for your business such as through angel investors, crowdfunding, and bank loans.
Venture capital funding is mainly of three types:
Startups and businesses that are looking to establish themselves and begin their operations can apply for this specific funding.
It is further divided into three types –
- Seed funding
It is a small sum that is provided to aid businesses in meeting loan eligibility.
- Start-up funding
These funds are offered to startups to develop and launch their products and services.
- First stage funding
These funds are provided to startups to begin operating.
This particular funding is provided to businesses that are trying to expand their operations at different stages.
Expansion funding is of three types –
- Second stage funding
It is offered to businesses that are trying to begin expanding.
- Bridge funding
Funds are provided to firms to finance their current expenditures until long-term funding is granted.
- Mezzanine funding
Offered to assist businesses in mergers and acquisitions.
It is provided for two purposes –
- When firms are trying to acquire a part or area of another firm.
- To assist firms to acquire another business.
Venture capital funding is an important resort for startups and firms that are just starting or looking to expand themselves. Especially for businesses that do not have good financial backing as firms do not have the obligation of returning the money if the company fails. Venture capital firms tend to have a widespread network so the businesses can benefit through their connections by marketing their products. They have years of expertise and experience in different areas of business so the startups can take their guidance to improve their operations. There are also some risks and disadvantages of acquiring venture capital funds. These investment firms have a say in the businesses and they are supposed to be an integrated part of all the discussions and decisions regarding the business. It can also be challenging to acquire funds in the first place. Considering the number of startups and firms that are trying to get their hand on the funds, it’s tough competition out there. But Venture Capital Funds can prove to be beneficial in the early stages of setting up and expanding.