Does Angel Funding Look Promising For Startups In 2021 Amid Ongoing Pandemic?
Entrepreneur magazine|April 2021
Ever since the world has been stormed by the coronavirus outbreak, economies across the globe have been in turmoil, with massive layoffs, shutting down of the businesses and cost-cutting measures have come into the light.
Aditya Rangroo

As the pandemic hit the economies, the investment ecosystem in India faced several challenges coupled with uncertainties about the future. Many of the businesses across sectors suffered major economic jolt since April 2020 as the result of the frequent lockdowns. Among several businesses, startups and even early-stage startups received the major blow initially, as most of these firms are mainly driven by the funding by private equity/venture capitalists. The funding accelerates the growth for the startups, which in turn, translates into revenue for the investors. Though the pandemic impacted the economic cycle, however, surprisingly several startups have registered growth during these times. On the other hand, some PE/VC firms had been perhaps cynical about their investment planning for the year 2021 in the backdrop of the ongoing COVID-19 though this doesn’t seem to be the case anymore. Similarly, angel funds also faced some roadblocks during the beginning of the pandemic; however, they seem to have regained confidence in their investments. In the meantime, many analysts have voiced optimism about the growth prospects of the Indian startup ecosystem in 2021.

COVID‘ TEMPORARILY’ INTERRUPTS INVESTORS’ CONFIDENCE

The outbreak of the covid resulted in lockdown across the country beginning from March 2020. According to 92% of investors surveyed by FICCI and Indian Angel Network in July 2020, the investments into the startup ecosystem in India were badly impacted and faced several hurdles. Out of 27 investors who were part of the survey that included 250 startups and 34 incubators, 56% claimed moderate impact while 40% had said startup funding would be severely impacted due to covid. Subsequently, about 59% of investors had said they would be keen to work with startups in their current portfolio until the situation improves instead of working on new deals, a survey showed. Not only that, but the covid also impacted the investors’ confidence as suggested by another survey titled “Impact of Covid-19 on Indian Startups”. It suggested that the response from investors to pitches made by startups wasn’t enough encouraging as only 8% of startups were able to sign the agreement and receive the funds during the lockdown. On the other hand, about 33% of startups had said that the decision to invest has been put on hold by investors while for 32% of startups, there was no response from investors.

STARTUPS ECOSYSTEM LIKELY TO THRIVE

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