Are you Sailing with the Angel Wave?

“The early bird gets the worm, but the second mouse gets the cheese.” ― Willie Nelson

As we mentioned in our introduction post on fundraising,your venture + good timing = increased odds of success

Now ask yourself these two questions:

Is your market or your customer ready for what you have to offer?

And are they willing to pay for it?
Take for instance, the #trending #PayTM. They couldn't have picked a better time to come into the picture; when both economy and the government want to go cashless. But whether the PayTM team could foresee this or if it was serendipity, is not our focus in this post, it is their timing that interests us! Let’s look at some data that investigates this further.

Here is a good place to let you know that this the third post of our Q2 Report series. You can click here to read the introduction post and here to read the previous post on funding ask vs. valuation :)

The Data in consideration here includes a sample size of 650+ startups:

1. Startups who applied for fundraising on LetsVenture in Q2, FY 16-17
2. Funded ventures in Q2, FY 16-17 on LetsVenture and publicly available information

We’ll start with analysing the demand side. The idea here is to look at the demand and supply distribution across sectors and what is hot and what is not. LetsVenture curates the startups that are made visible to investors on the platform. Hence, to move to the fundraising section on the platform, the founder needs to apply and get approved for Investor Connect. These are the startups we consider as actively fundraising startups on the platform.

Please note that the sectors we are considering here are those which have seen at least one funding happening in the Q2 of this financial year. Also, we have included E-commerce/ Marketplace as a sector but we will not be using them while making conclusions on Sectoral trends as they are horizontal classifications of business models. This is how the distribution across looks like:

This graph basically depicts the sectoral distribution of over 600 ventures who applied for Investor Connect on the LetsVenture platform (looking to raise funds). Media & Entertainment sits at the top. Most of the startups we are seeing here are across discovery (Content, Experiences, Nightlife etc.), Digital Media, Social Media and Entertainment. Fintech, Healthcare, Education, Services etc. being evergreen sectors stay at the centre of the pyramid. We are still seeing a good number of startups in F&B and Travel & Tourism which is pretty encouraging. F&B has mainly seen packaged F&B and Food R&D startups while a lot is happening around Travel discovery, Travel planning and Hospitality. Good to see IoT, Enterprise Software, Big Data, Agriculture and AI picking up in the country. Limited conclusions can be made just at looking the demand side, let us move to see how the market is performing.

Next, we look at the funding action that has happened over the course of 3 months. The data in consideration here is publically available fundraise data published in the same quarter.

Interestingly, Education is the hottest sector in terms number of deals done in a particular sector. Then come Healthcare, Enterprise software and F&B followed by Media & Entertainment #Oops, Services, Fashion and Fintech.

Now the fun part, a comparison:

Fun fact: Assuming that around 60% of the companies that raised funds are on LetsVenture and that 30% of them raise funds in Stealth mode (unpublished), it is safe to say that 17% of the companies willing to raise funds actually raise funds in the angel market. #competition and that’s the average we’re working with.

Key Observations from the data:

1. In spite of sitting on top, Media & Entertainment is not performing too well when it comes to fundraising. As a result, this arena has gotten crowded and companies venturing this direction can expect some serious competition.
2. The percentage of funded companies across Internet of Things, Big Data, Gaming and Agriculture is not too high but add them to your emerging list, we’ve been noticing them and there is definitely growth to keep an eye out for.
3. The highest percentage of companies that got funded for a particular sector stands at 38.1% for Enterprise Software. It is one of the hottest sectors in the country at present.
4. Fashion, Education and Human Resources are a few sectors that are positioned above average. The consistency in their funding place them amongst the hot sectors.
5. Note: Internet of Things, Travel & Tourism, Big Data and Advertising are not doing too well. But keep in mind Internet of Things and Big Data show serious growth potential but Advertising and Travel & Tourism; not feeling too optimistic about them.
6. Sectors in focus: F&B - 19%, Retail - 16%, Services - 14% and Logistics - 17%. See a trend? Their percentages are pretty close to the average (in the fun-fact). Quite broadly, this indicates that it's not a bad time to be a startup in India. All sectors with average performances are a proof of the same.

Hope you found this useful. Our message to you is loud and clear - good startups are still getting funded. Stop worrying, work with the time, pick a problem you love, go out and solve it!!

Lastly, applications for LetsIgnite are closing on Jan 18th 2017 so hurry and apply if you’re looking to get funded or find a lead investor.

Stay tuned and let us know if you have any questions, reach us at startups@letsventure.com

Happy Fundraising, you got this!