Unfair to compare current start-up funding climate to 'exuberant' 2021: Sequoia’s Rajan Anandan

Rajan Anandan, Managing Director of Sequoia India, said it won't be appropriate to compare 2022 or any year to 2021 when it comes to start-up funding. 

“2021 was a year of exuberance,” he said while speaking at an event in Gurugram recently.  

According to estimates, Indian start-ups racked up a whopping $42 billion alone from global investors including giants like SoftBank, Accel, Tiger Global, and others in 2021. This number went down by about 50 per cent in late-stage start-ups in 2022, according to a report by Tracxn. 

Anandan said that funding in the Indian start-up ecosystem has grown by at least 10x over a period of time so the current scenario shouldn't worry anyone too much. 

From funding winter to the Silicon Valley Bank (SVB) crisis, the Indian start-up ecosystem has been rocked with several challenges. Despite the sombre scenario, the investor said that is the good time to become an entrepreneur or invest.  

Anandan said: “We are globally at a very turbulent period of time. Despite all of this, the reality is that there has never been a better time to build, to start up or to invest in tech and non-tech startups.” 

He said there are several reasons to believe so. Valuations are getting balanced and adjustments are happening both in the public as well as private markets, among other things. Business Today reported earlier that India accounted for 20 per cent of all venture capital (VC) funding in the APAC region for the first time in 2022, even as the year was defined by a capital market slowdown.  

Anandan said that owing to conversations around profitability becoming stronger, several start-ups that are struggling right now will become profitable in the coming months.  

“The first thing to keep in mind is the narrative, in many ways the reality, is that a large number of the unicorns are unprofitable. In 24 months, we will be shocked at how profitable they are going to get,” he noted.
 

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