Say you have got a brilliant idea for a startup that can change the way we see things, that solves a problem that everyone needs a solution or boosts the economy. But you do not have enough money to put your vision into being. Sure, there are a lot of ways in which a startup can get funding to establish the foundation of the business. But given the fact that three out of four startups fail, who would like to take the risk to invest in a newfound business?
Capital and startup go together, that is where a VC (venture capital) firm comes into the picture. But if you are not very familiar with the term. Continue reading with us to get an idea of what a venture capital firm is.
- Tiger Global Management
- Omidyar Network India
- 3one4 Capital
- Kalaari Capital
- Blume Ventures
- Helion Ventures
- India Angel Network
- Mumbai Angel Network
- Sixth Sense Ventures
What is a VC Firm and How Does it Work?
People involved in a Venture Capital firm include entrepreneurs, investors, investment bankers, and venture capitalists. A venture capital firm will invest in your business with the aim of a good ROI (Return on Investment) and have a stake which is usually less than 50% in the ownership of your startup. The other main goals include exiting the investment. Either by selling off their stake or through an IPO (Initial Public Offering) at a profit and giving back to its investors.
A venture capitalist firm is run by venture capitalists who raise venture capitalist funds by taking money from other people and investing it into promising young companies. These firms could clearly outline which industry they want to invest in. Who are the people they are looking for? What kind of funding do they want to do? At what stage of your business? And how much money are they willing to pool in?
Stages of Funding Rounds
- Pre-seed funding round: Investments in startups are known as private equity or venture capital. Despite their high risk, these investments also have a greater chance of exponential growth.
- Seed funding: This is the earliest stage in the process of raising capital for your startup.
- The A-series: Funding is for when the company has established product and market fit, started to make some serious buzz and its customer base is growing fast.
- The B Series: This represents a period when the firm generates significant revenue in particular markets and looks to expand its reach.
- The C series: Eventually, the company will expand and operate globally. If it is ready for an IPO, it may be purchased by another company or continue operating as a private company.
Other Ways of Fundings for a Startup
Besides Seed Funding, there are other ways too, by which a startup can collect funds, some of the common ways are:
- Bootstrapping is a method of raising pre-seed funds. When a startup bootstraps itself, it means that it launches without the help of external investors. Thus, the cash flow produced by the business itself fuels internal growth. A bootstrapped business may raise capital through customer funding, personal debt, or personal savings in its initial stages, which works as an effective model for some new companies. However, bootstrappers may face cash flow issues due to high levels of personal stress.
- Governments or industry-specific organizations provide grants to these startups for entrepreneurs who do not wish to give up equity, grants are another alternative for venture capital.
- Family, friends, and relatives are usually the first ones to support and invest in your startup. When you haven't achieved much success or haven't done anything, that can prove a tangible return on investment. In this scenario, your stakeholders may have limited or no experience with venture capital. Known as the three F’s (Friends, Family, and Fools), this is considered the fourth type of pre-seed funding.
- Pre-seed accelerator programs are the fifth type. Through these programs, founders learn lean startup practices, develop a scalable and repeatable business plan, and show some product-market fit to attract early customers to their product.
- Lastly, crowdfunding can be used for pre-seed funding, and here financing is approached differently. A crowdfunding campaign is a way of raising money from many individuals in small amounts, often online. The types of crowdfunding include equity-based, reward-based, debt-based, and donation-based.
Top 10 Venture Capital Firms in India
Check out the Top 10 active VC Firms in India in 2022.
Tiger Global Management
Founder: Chase Coleman III
Investment stage: Series A to pre-IPO stages of companies
Industry: Software, Consumer, and FinTech
Tiger Global Management based in New York has affiliate offices in Hong Kong, Beijing, Singapore, and Bangalore. It is one of the most active global tech investors and follows a long-term-based investment approach to generate superior risk-adjusted returns for its investors. They started their public equity in the year 2001 and private equity in 2003 making investments in growth-oriented private companies from early to late stages.
Last year it was listed under the list of the world's biggest unicorns with most of the co-investors in the company being Accel, Coatue, and DST Global. Some of their notable investments include companies like Shein, Meta (formerly known as Facebook), Coinbase, AirBnB, Uber, SoftBank, and more. Their latest fund size as of March 2022 is $12.7 billion.
Omidyar Network India
Founder: Pierre Omidyar
Investment stage: Early-stage enterprises
Industry: Digital Society, Education, Emerging Tech, Financial Inclusion, Cities & Innovation, and Property Inclusivity
Omidyar Network India is a part of the Omidyar Group, whose organizations and initiatives are supported by philanthropists Pam and Pierre Omidyar, founder of eBay. This period represents a period when the firm generates significant revenue in particular markets and looks to expand its accompanies to fast-track its growth. As well as giving access to the Center of Excellence Board for strategic and operational inputs.
Founders: Jim Swartz and Arthur Patterson
Investment stage: Pre-seed, seed, early, and growth-stage investments
Industry: Computing and Storage, Infrastructure, Consumer, Internet & Media, Enterprise Software & Services, Mobile Networking Systems, Retail Consumer, Security, Technology Enabled Services
Formerly known as Accel Partners, Accel has backed up some of the most successful companies like Flipkart, Dropbox, Etsy, Facebook, Spotify, Slack, Vox Media, and many more over the past thirty-five years. Accel has a global community of entrepreneurs and has been investing in private companies from their pre-seed, seed, early, and growth-stage investments.
Founded in 1983, Accel has been one of the most active venture capital firms in Silicon Valley still going strong with their core principles, completing thirty-five years in the industry last year. The company values collaboration, placing the group above everything else, and creating investors from within. Accel continues to move forward with its Silicon Valley state of mind. Their most recent investment made was $57M raised by Middesk in June 2022.
Founders: Pranav Pai and Siddharth Pai
Investment stage: Early-stage venture capital fund
Industry: Fintech, consumer products, SaaS, digital media, climate tech, and digital health
3one4 Capital is a venture capital firm based in Bangalore, India. Specialities include investment in startups based in early stages, seed capital and early investments. The firm works with the founding team, bringing in subject proficiency to find the best strategy for the product market for defensibility, revenue growth, and creating an impact. Focused on delivering uncompromised end-user experiences, curtailing risk, uncovering new growth opportunities, and yielding rewarding outcomes for all the stakeholders involved.
Interested in the intersection of adjacency that is large, growing, and ready for unique products and services and select market categories, the VC firms' investments are biased towards companies exploiting technology to create, grow, or dominate large markets in India. Notable investments by 3one4 Capital include companies like Licious, Darwinbox, Jupiter, Betterplace, Open, Bugworks, Koo, Dozee, and Tracxn.
Founder: Vani Kola
Investment stage: Seed and A Series
Industry: Technology-oriented companies
Started in the year 2006 by Vani Kola and headquartered in Bangalore, Kalaari Capital is an early-stage technology-focused venture capital firm based out of Bengaluru, India. Kalaari continues to empower and work with visionary entrepreneurs that build unique solutions that reshape the way Indians live, work, consume and transact. Kalaari partners early with founders and works with them to navigate the inevitable challenges of fostering ideas into successful businesses.
Kalaari believes in being authentic, perceptive, and responsive. Accelerate and enable your firm to give importance to your potential more than your pedigree.
Founder: Karthik and Sanjay
Investment stage: Seed-stage and early-stage companies
Industry: Business products, business services, consumer products, consumer services, financial services, healthcare, information technology, manufacturing, cybersecurity, big data, e-commerce, blockchain, cannabis, business-to-business payments, mobile commerce, Esports, TMT, gaming, and technology-based
Bridging the gap in the Indian market between local angel networks and larger global venture capital firms, Blume Ventures is a key player in India’s startup ecosystem and has backed up and built many transformational networks ever since. Backing up ventures that trigger a fundamental change in consumer behaviour, impacting larger markets, and solving problems that are difficult and uniquely Indian in nature.
The testimonials clearly treat companies as customers, not just as portfolios. Offering more than just financial help, being friendly, being open-minded, and collaborative in their efforts. Blume Ventures has managed over $280M+ in Capital, backed up more than 150 Startups, and made 24 Exits. Ventures like Purple.com, HealthifyMe, Dunzo, Turtlemint, Locus, and more have been backed by Blume ventures.
Founders: Rahul Chandra, Ashish Gupta, Kanwaljit Singh, and Sanjeev Aggarwal
Investment stage: Early to mid-stage venture
Industry: Outsourcing, Internet, Mobile, Technology Products, Retail Services, Healthcare, Education, and Financial Services.
Helion Ventures helps organizations build based on strategies and in making strategic choices. It is a $605 Million India-focused VC firm. That supports early to mid-stage venture funds investing in technology-powered and consumer service businesses in sectors like Outsourcing, Internet, Mobile, Technology Products, Retail Services, Healthcare, Education, and Financial Services. Mainly focusing on making investments based in India. Some notable investments were made in ventures like BYJU'S, Gupshup, Ola, LivSpace, Toppr, and more.
India Angel Network
Founders: Padmaja Ruparel, Raman Roy and Saurabh Srivastava
Investment stage: Early-Stage Venture, Seed
Headquarters: New Delhi
The members of the India Angel Network lead from the front, having strong operational experience as CEOs or a background in creating new and successful ventures. The advantages of working with the firm are they are willing to invest money and time, have the ability to leverage a vast network, and give quick feedback on investment decisions.
Keen to invest in startups based in their early stages, the India Angel network provides quality mentoring, and vast networks give input on strategies and move ahead with its execution. Working with sectors as diverse as Agriculture, E-Commerce, Education, Financial Services Gaming Healthcare Hospitality, information, and more. A few notable investments of India Angel Network are WOW momo, Zippr, Wiwigo, Pikkol, etc.
Mumbai Angel Network
Founder: Nandini Mansinghka
Investment stage: Early-stage investments
Industry: Technology, consumer, life sciences, defence technology, space technology, electric vehicles
The Mumbai Angel Network invests in a wide variety of domains such as—technology, consumer, life sciences, defence technology, space technology, electric vehicles, and hemp seeds. They have over seven hundred investors in more than sixty cities around the world and are focused on new venture investing. The premier private investment platform has invested more than 150 crores with a base of more than 700 investors.
The portfolio of Mumbai Angel Network includes startups like Snackible, LegalKart, Barneys, Brainwired, etc.
Sixth Sense Ventures
Founder: Nikhil Vora (Ex-Managing Director of IDFC Securities), Swati Nangalia Mehra
Investment stage: Seed, A Series, B series, and more
Industry: Transportation, Logistics, Supply Chain, and Storage
Known as India's first domestic consumer-centric venture fund. The Sixth Sense Ventures combines foreseeing a trend together with deep insights and delivers a clear vision. The sixth sense has a focus on Indian start-ups and leads with an immensely powerful team. Having cumulative experience in the wider consumer domain, their core team has a strong Center of Excellence Board.
The company creates value for both investors and invested companies. The firm has strong consumer-centric research and investment analysis in its ecosystem, making it easy for companies to fast-track their growth. As well as giving access to the Center of Excellence Board for strategic and operational inputs. The portfolio of Sixth Sense Ventures includes startups like Ethos, Bira 91, AVG Logistics, MyHealthcare, etc.
The venture capital firms in India are growing at a fast pace and supporting budding entrepreneurs with not only money but also guiding them by mentoring them and helping them grow in various aspects of different industries. Helping entrepreneurs and their startups achieve success against all odds.