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New Trends in Startups and Scaleups Investment

Startup Funding

The cascading effects of an unprecedented pandemic-COVID-19 are still affecting human lives and businesses, a sense of optimism acts as a strong driving force. As vaccination against COVID-19 reaches the majority of people, investment in innovation through startups and companies is expected to gain further momentum in the Post COVID period. Venture Capital (VC), Angel investors, and investors for startups/businesses have geared up to tap the potential that exists in several high-growth sectors globally.

Global investment

Global Focus on Innovations

As the world is opening to new investment activities are also picking up. Private Equity, VC, Angel funding, and other investment modes are being explored by startups and businesses more seriously and aggressively now. Globally, investment started picking up in Q1’ 2021 and it witnessed a significant surge in Q2’2021. Several countries including the United States, Australia, the Netherlands, Switzerland, Israel, India, France, Germany, the United Kingdom, Brazil, Mexico, and Canada saw their highest funding recently. Both Startups and scaleups have been focusing on embracing innovative business models in the new normal and investors expect innovation to be a dominant force going forward. A new trend is emerging with a focus on innovations and innovative business models for investment.

Tech Industry

A surge in Shining Sector

Investment companies now gear up to tap the huge potential that exists in high-growth sectors such as Fintech, Health-Tech, IoT, Biotechnology, and Entertainment-Tech among others. It is widely admitted that venture capitalists or firms and even angels invest in a startup or a big company only after assessing the business model, growth potential, and strategies. Sectors such as Fintech, Health-Tech, e-Commerce, Ed-tech, and Cybersecurity top the chart. Fintech saw a banner quarter of investment across the Americas- the USA, Latin America, in Q2’21, attracting hundreds of million USD funding rounds. In 2020, the largest Indian business conglomerate Reliance Group’s acquisition of Netmeds (an online pharmacy platform) indicates yet another emerging trend-that shining sectors can attract huge funding.

Angle Vs VC

Angel versus VC Investment

Angel investor definition does not lead to any confusion. By definition, Angel investors are high net individuals who invest their own money in companies. Private Equity, Venture Capital, and Angel funding are the main sources of investment for startups and even for big corporate entities. Venture capitalists and angel investors have emerged as big promoters for innovative start-up firms. It is empirically proven that Angels do prefer technology and science companies compared to others. However, venture capitalists, driven by processes and professionally trained people, are mainly risk capital companies that invest other persons’ money (in some cases their own general partner funds) in companies with strong growth prospects.

Development in Canada

Canada Boom

VC investment and deals activities in Canada have been surging significantly. The investment came majorly in the healthcare sector and biotech. With huge investments coming in Canada and the rest of the Americas, the number of unicorns has gone up significantly. Fintech, biotech and new-age IT tools such as Artificial Intelligence (AI) have generated enormous interest in Canada given its strength in research and development. The increased investment in AI-based startups in the last few quarters indicates a new trend that Canadian companies have started leveraging their potential to commercialize AI innovations. VC investment and deals activities in Canada have been surging significantly. The investment came majorly in the healthcare sector and biotech. With huge investments coming in Canada and the rest of the Americas, the number of unicorns has gone up significantly. Fintech, biotech and new-age IT tools such as Artificial Intelligence (AI) have generated enormous interest in Canada given its strength in research and development. The increased investment in AI-based startups in the last few quarters indicates a new trend that Canadian companies have started leveraging their potential to commercialize AI innovations.

Investment in India

India to Build-on a Profitable Decade

India has witnessed a very profitable decade (2011-2020) in terms of venture capital investment. Investment (VC and Private Equity) grew at a CAGR of 19% from USD 8.4 billion in 2011 to USD 47.6 in 2020. Overall, the decade recorded a cumulative value of investment worth USD 232.4 billion. It was just double compared to the previous decade. The decade ended on a record high of US$47.6 billion in PE/VC investments in 2020 despite the sharp downturn in investment sentiment due to the COVID-19 pandemic. The pandemic has also led to the rapid adoption of technology across companies and governments alike, as well as, brought into focus the need for investments into the life sciences sector. Overall, angel and VC investors seem to have a positive view. Fintech, health-tech, ed-tech, agri-tech, pharmaceuticals, technology, e-commerce among others have gained momentum and these segments would be among the leading sectors for investments in the future as well.

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