VC funding at normal levels: Vertex Ventures

This is adapted from Financial Express

Vertex Ventures Southeast Asia and India is one of the six major funds in Vertex’s global network of venture capital funds, where the anchor investor is Vertex Holdings — a wholly-owned subsidiary of Singapore’s Temasek Holdings.

Venture capital funding may have come down from the highs seen in 2021, but the current levels are ‘normal’, Piyush Kharbanda, general partner at Vertex Ventures Southeast Asia and India, said. The bigger problem, according to Kharbanda, is the mismatch between the expectations of startups and venture capitalists.

“While people are trying to raise, it’s not yet easy to invest at the stage they are trying to raise. For example, they haven’t figured out even early product market fit for a Series A or unit economics in depth for a Series B,” Kharbanda told FE. “We are trying to build relationships with companies but not really getting the sort of right set of opportunities. There’s still a little bit of expectation mismatch in the market,” he added.

Vertex Ventures Southeast Asia and India is one of the six major funds in Vertex’s global network of venture capital funds, where the anchor investor is Vertex Holdings — a wholly-owned subsidiary of Singapore’s Temasek Holdings. In India, the firm runs its fifth fund of $541 million and has so far invested in companies such as Licious, Kuku FM, Nium, and is a former investor of FirstCry.

The fund, which aims to make six-eight investments a year, usually cuts cheques of around $2-12 million for seed to Series B startups, largely in the consumer, fintech and enterprise software-as-a-service (SAAS) sectors. It is also bullish on local B2B platforms and marketplaces, and has invested in on-demand manufacturing solutions platform Karkhana.io. Within fintech, Kharbanda expects new forms of lending to grab the spotlight going ahead.

“Ten years ago, supply chain financing or vendor financing was only done by banks or large corporations. Now, smaller corporates are getting supply chain financing done via some of these smaller platforms. Over the next 10 years, this market will expand with more GST and e-way bills data. There is an insatiable appetite for this kind of credit in our country,” he added.

As for evolving patterns of consumption in India, Kharbanda noted that consumption baskets are shifting faster than ever before. “So, you can’t have a hero product that will sustain for a very long period of time. If brands are not able to change their product SKUs, we don’t know how would they succeed. There is now a much faster and shorter lifespan for a product in the mind of a consumer.”

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