The firm came up with a report claiming funding activity more than doubled to Rs 693 crore in 2019. In the previous year, the funding activity was pegged at Rs 334 crore. Surprisingly, there were 22 percent more investment deals. And the average deal size was a good 70 percent higher than the last year.
Ashish Sharma, CEO, InnoVen Capital India, explained in a statement, "Early stage investment activity has been very robust this year, with increased deal flow, bigger transaction sizes and higher valuations."
"The competitive intensity in early stage has gone up, with a large set of institutional and angel investors looking to find the right opportunities," Sharma added.
For startups the good news is investors are more open to funding start-ups in the pre-revenue stage. The report says that share of pre-revenue funded start-ups increased by 17 per cent in 2019. In 2018, it was 12 percent. This trend is driven by concept stage ventures launched by second time entrepreneurs and experienced first-time operators.
In what appears as great news for experienced founders, the report revealed that investors preferred backing more experienced founders.The proportion of founders with at least five years experience has shot up to 82 percent this year from last year's 55 percent.
Other key take-aways from the study are as follows:
• The research says Bengaluru, National Capital Region (NCR) and Mumbai continued to form the core of the start-up eco-system in the country.
• Share of Bengaluru (37 per cent) and Mumbai (20 per cent) hovered around 2018 levels while NCR saw a significant rise, increasing from 17 per cent in 2018 to 29 per cent this year.
• Consumer Internet, enterprise tech/Artificial Intelligence (AI), fintech and ed-tech emerged as the most active sectors for early stage investors.
• Investors believe that this trend will continue but indicated that they would like to do more in enterprise tech & AI and fintech in 2020.
• Almost 50 per cent of early stage investors felt that the valuations in 2019 were on the higher side due to intense competition for quality deals, said the report titled "InnoVen Capital: Early Stage Investment Insights Report 2019".
• However, the majority (56 per cent) foresee some correction in the valuations in 2020.
*The report is based on inputs from reputed early stage institutional investors.