In order to assist and facilitate the formation of at least 5,000 startups by 2035, the Delhi government has produced the draft “Delhi Startup Policy, 2025”. The government plans to launch a venture capital fund with a value of INR 200 Cr under the draft policy.
Benefits for Startups: Rentals, Patents, and Operating Expenses
According to the draft policy, the Government of the National Capital Territory of Delhi (GNCTD) may host experiential learning workshops in collaboration with prominent investor networks to educate high-net-worth individuals and prospective investors on the ins and outs of startup investing.
Additional benefits include a 100% reimbursement of leasing rentals for a maximum of three years, up to INR 10 lakh annually. Full reimbursement for filing patent designs up to INR 3 lakh for foreign filings and INR 1 lakh for domestic filings. For a year, a monthly allocation of INR 2 lakh will be given for operating expenses.
New Incubation Centres and Coworking Spaces in Delhi
In addition to the funding, the programme suggests establishing new coworking spaces or incubation centres to offer operational and capital support “over and above” the current Central government subsidies for a five-year term.
In order to mentor businesses situated in the nation’s capital, the Delhi government will also look into forming alliances with academic institutions, incubators, government labs, and financial organisations.
Virtual Incubation and Mentor Network via Delhi Incubation Hub
Through the Delhi Incubation Hub network, the Delhi government will offer entrepreneurs virtual incubation services so they can connect with mentors and experts. A policy monitoring committee will also be established by the BJP government, with the commissioner of industries serving as its head.
The group will also include a few industry specialists, the secretary of the planning department, and the deputy commissioners of the industries department.
Startup Task Force to Monitor Policy Implementation
Additionally, the policy suggests forming a “Startup Task Force” to review and approve applications submitted to obtain benefits under the programme. Five industry experts and two commissioners from the industries department would lead this force.
Every six months, the task team will be in charge of assessing the state of implementation. The state government’s emphasis on encouraging entrepreneurship coincides with the rapid expansion of the startup scene in the nation. With about 1.9 lakh firms that have funded over $164 billion to date, the Indian startup ecosystem is currently the third largest in the world.
Comparison with Haryana and Andhra Pradesh Startup Policies
States around the country are enacting specific laws to support startups in an effort to boost the local economy and generate employment. For example, as part of its state startup policy, the state of Haryana recently asked private investors to donate INR 2,000 Cr to a “Fund of Funds”.
In addition, the government of Andhra Pradesh recently unveiled the “AP Innovation & Startup Policy (4.0) 2024-2029”, which aims to establish 20,000 new companies over the course of the following five years.
Quick
Shots
•INR 200 Cr VC Fund – Govt to launch
venture capital fund to boost startup financing.
•Financial Support – 100% reimbursement
on rentals (up to INR 10 lakh/year for 3 years) & patent filing costs.
•Startups to get INR 2 lakh/month for
1 year.
•New coworking spaces & incubation
centres planned in Delhi.
Say you have got a brilliant idea for a startup that can change the way we see things, that solves a problem that everyone needs a solution or boosts the economy. But you do not have enough money to put your vision into being. Sure, there are a lot of ways in which a startup can get funding to establish the foundation of the business. But given the fact that three out of four startups fail, who would like to take the risk to invest in a newfound business?
Capital and startup go together, that is where a VC (venture capital) firm comes into the picture. But if you are not very familiar with the term. Continue reading with us to get an idea of what a venture capital firm is.
People involved in a Venture Capital firm include entrepreneurs, investors, investment bankers, and venture capitalists. A venture capital firm will invest in your business with the aim of a good ROI (Return on Investment) and have a stake which is usually less than 50% in the ownership of your startup. The other main goals include exiting the investment. Either by selling off their stake or through an IPO (Initial Public Offering) at a profit and giving back to its investors.
A venture capitalist firm is run by venture capitalists who raise venture capitalist funds by taking money from other people and investing it into promising young companies. These firms could clearly outline which industry they want to invest in. Who are the people they are looking for? What kind of funding do they want to do? At what stage of your business? And how much money are they willing to pool in?
Stages of Funding Rounds
Pre-seed funding round: Investments in startups are known as private equity or venture capital. Despite their high risk, these investments also have a greater chance of exponential growth.
Seed funding: This is the earliest stage in the process of raising capital for your startup.
The A-series: Funding is for when the company has established product and market fit, started to make some serious buzz and its customer base is growing fast.
The B Series: This represents a period when the firm generates significant revenue in particular markets and looks to expand its reach.
The C series: Eventually, the company will expand and operate globally. If it is ready for an IPO, it may be purchased by another company or continue operating as a private company.
Other Ways of Fundings for a Startup
Besides Seed Funding, there are other ways too, by which a startup can collect funds, some of the common ways are:
Bootstrapping is a method of raising pre-seed funds. When a startup bootstraps itself, it means that it launches without the help of external investors. Thus, the cash flow produced by the business itself fuels internal growth. A bootstrapped business may raise capital through customer funding, personal debt, or personal savings in its initial stages, which works as an effective model for some new companies. However, bootstrappers may face cash flow issues due to high levels of personal stress.
Governments or industry-specific organizations provide grants to these startups for entrepreneurs who do not wish to give up equity, grants are another alternative for venture capital.
Family, friends, and relatives are usually the first ones to support and invest in your startup. When you haven’t achieved much success or haven’t done anything, that can prove a tangible return on investment. In this scenario, your stakeholders may have limited or no experience with venture capital. Known as the three F’s (Friends, Family, and Fools), this is considered the fourth type of pre-seed funding.
Pre-seed accelerator programs are the fifth type. Through these programs, founders learn lean startup practices, develop a scalable and repeatable business plan, and show some product-market fit to attract early customers to their product.
Lastly, crowdfunding can be used for pre-seed funding, and here financing is approached differently. A crowdfunding campaign is a way of raising money from many individuals in small amounts, often online. The types of crowdfunding include equity-based, reward-based, debt-based, and donation-based.
Check out the Top 10 active VC Firms in India in 2022.
Tiger Global Management
Founder: Chase Coleman III
Established: 2001
Investment stage: Series A to pre-IPO stages of companies
Industry: Software, Consumer, and FinTech
Portfolios: 763
Headquarters: Mumbai
Tiger Global Management based in New York has affiliate offices in Hong Kong, Beijing, Singapore, and Bangalore. It is one of the most active global tech investors and follows a long-term-based investment approach to generate superior risk-adjusted returns for its investors. They started their public equity in the year 2001 and private equity in 2003 making investments in growth-oriented private companies from early to late stages.
Last year it was listed under the list of the world’s biggest unicorns with most of the co-investors in the company being Accel, Coatue, and DST Global. Some of their notable investments include companies like Shein, Meta (formerly known as Facebook), Coinbase, AirBnB, Uber, SoftBank, and more. Their latest fund size as of March 2022 is $12.7 billion.
Omidyar Network India
Founder: Pierre Omidyar
Established: 2004
Investment stage: Early-stage enterprises
Industry: Digital Society, Education, Emerging Tech, Financial Inclusion, Cities & Innovation, and Property Inclusivity
Portfolios: 100+
Headquarters: Mumbai
Omidyar Network India
Omidyar Network India is a part of the Omidyar Group, whose organizations and initiatives are supported by philanthropists Pam and Pierre Omidyar, founder of eBay. This period represents a period when the firm generates significant revenue in particular markets and looks to expand its accompanies to fast-track its growth. As well as giving access to the Center of Excellence Board for strategic and operational inputs.
They have a total of 102 active investments, raising the combined fund size to around $417 million. Few notable clients of Omidyar Network India are 1mg, Quikr, WhiteHat Jr, Zest, etc.
Accel
Founders: Jim Swartz and Arthur Patterson
Established: 1983
Investment stage: Pre-seed, seed, early, and growth-stage investments
Industry: Computing and Storage, Infrastructure, Consumer, Internet & Media, Enterprise Software & Services, Mobile Networking Systems, Retail Consumer, Security, Technology Enabled Services
Portfolio: 1840+
Headquarters: Bengaluru
Formerly known as Accel Partners, Accel has backed up some of the most successful companies like Flipkart, Dropbox, Etsy, Facebook, Spotify, Slack, Vox Media, and many more over the past thirty-five years. Accel has a global community of entrepreneurs and has been investing in private companies from their pre-seed, seed, early, and growth-stage investments.
Founded in 1983, Accel has been one of the most active venture capital firms in Silicon Valley still going strong with their core principles, completing thirty-five years in the industry last year. The company values collaboration, placing the group above everything else, and creating investors from within. Accel continues to move forward with its Silicon Valley state of mind. Their most recent investment made was $57M raised by Middesk in June 2022.
3one4 Capital
Founders: Pranav Pai and Siddharth Pai
Established: 2015
Investment stage: Early-stage venture capital fund
Industry: Fintech, consumer products, SaaS, digital media, climate tech, and digital health
Portfolios: 50+
Headquarters: Bengaluru
3one4 Capital
3one4 Capital is a venture capital firm based in Bangalore, India. Specialities include investment in startups based in early stages, seed capital and early investments. The firm works with the founding team, bringing in subject proficiency to find the best strategy for the product market for defensibility, revenue growth, and creating an impact. Focused on delivering uncompromised end-user experiences, curtailing risk, uncovering new growth opportunities, and yielding rewarding outcomes for all the stakeholders involved.
Interested in the intersection of adjacency that is large, growing, and ready for unique products and services and select market categories, the VC firms’ investments are biased towards companies exploiting technology to create, grow, or dominate large markets in India. Notable investments by 3one4 Capital include companies like Licious, Darwinbox, Jupiter, Betterplace, Open, Bugworks, Koo, Dozee, and Tracxn.
Kalaari Capital
Founder: Vani Kola
Established: 2006
Investment stage: Seed and A Series
Industry: Technology-oriented companies
Portfolios: 110+
Headquarters: Bengaluru
Kalaari Capital
Started in the year 2006 by Vani Kola and headquartered in Bangalore, Kalaari Capital is an early-stage technology-focused venture capital firm based out of Bengaluru, India. Kalaari continues to empower and work with visionary entrepreneurs that build unique solutions that reshape the way Indians live, work, consume and transact. Kalaari partners early with founders and works with them to navigate the inevitable challenges of fostering ideas into successful businesses.
Kalaari believes in being authentic, perceptive, and responsive. Accelerate and enable your firm to give importance to your potential more than your pedigree.
Blume Ventures
Founder: Karthik and Sanjay
Established: 2010
Investment stage: Seed-stage and early-stage companies
Industry: Business products, business services, consumer products, consumer services, financial services, healthcare, information technology, manufacturing, cybersecurity, big data, e-commerce, blockchain, cannabis, business-to-business payments, mobile commerce, Esports, TMT, gaming, and technology-based
Portfolios: 100+
Headquarters: Mumbai
Blume Ventures
Bridging the gap in the Indian market between local angel networks and larger global venture capital firms, Blume Ventures is a key player in India’s startup ecosystem and has backed up and built many transformational networks ever since. Backing up ventures that trigger a fundamental change in consumer behaviour, impacting larger markets, and solving problems that are difficult and uniquely Indian in nature.
The testimonials clearly treat companies as customers, not just as portfolios. Offering more than just financial help, being friendly, being open-minded, and collaborative in their efforts. Blume Ventures has managed over $280M+ in Capital, backed up more than 150 Startups, and made 24 Exits. Ventures like Purple.com, HealthifyMe, Dunzo, Turtlemint, Locus, and more have been backed by Blume ventures.
Helion Ventures
Founders: Rahul Chandra, Ashish Gupta, Kanwaljit Singh, and Sanjeev Aggarwal
Helion Ventures helps organizations build based on strategies and in making strategic choices. It is a $605 Million India-focused VC firm. That supports early to mid-stage venture funds investing in technology-powered and consumer service businesses in sectors like Outsourcing, Internet, Mobile, Technology Products, Retail Services, Healthcare, Education, and Financial Services. Mainly focusing on making investments based in India. Some notable investments were made in ventures like BYJU’S, Gupshup, Ola, LivSpace, Toppr, and more.
India Angel Network
Founders: Padmaja Ruparel, Raman Roy and Saurabh Srivastava
Established: 2006
Investment stage: Early-Stage Venture, Seed
Portfolios: 160+
Headquarters: New Delhi
India Angel Network
The members of the India Angel Network lead from the front, having strong operational experience as CEOs or a background in creating new and successful ventures. The advantages of working with the firm are they are willing to invest money and time, have the ability to leverage a vast network, and give quick feedback on investment decisions.
Keen to invest in startups based in their early stages, the India Angel network provides quality mentoring, and vast networks give input on strategies and move ahead with its execution. Working with sectors as diverse as Agriculture, E-Commerce, Education, Financial Services Gaming Healthcare Hospitality, information, and more. A few notable investments of India Angel Network are WOW momo, Zippr, Wiwigo, Pikkol, etc.
Mumbai Angel Network
Founder: Nandini Mansinghka
Established: 2006
Investment stage: Early-stage investments
Industry: Technology, consumer, life sciences, defence technology, space technology, electric vehicles
Portfolios: 200+
Headquarters: Mumbai
Mumbai Angel Network
The Mumbai Angel Network invests in a wide variety of domains such as—technology, consumer, life sciences, defence technology, space technology, electric vehicles, and hemp seeds. They have over seven hundred investors in more than sixty cities around the world and are focused on new venture investing. The premier private investment platform has invested more than 150 crores with a base of more than 700 investors.
The portfolio of Mumbai Angel Network includes startups like Snackible, LegalKart, Barneys, Brainwired, etc.
Founder: Nikhil Vora (Ex-Managing Director of IDFC Securities), Swati Nangalia Mehra
Established: 2014
Investment stage: Seed, A Series, B series, and more
Industry: Transportation, Logistics, Supply Chain, and Storage
Portfolios: 60+
Headquartered: Mumbai
Sixth Sense Ventures
Known as India’s first domestic consumer-centric venture fund. The Sixth Sense Ventures combines foreseeing a trend together with deep insights and delivers a clear vision. The sixth sense has a focus on Indian start-ups and leads with an immensely powerful team. Having cumulative experience in the wider consumer domain, their core team has a strong Center of Excellence Board.
The company creates value for both investors and invested companies. The firm has strong consumer-centric research and investment analysis in its ecosystem, making it easy for companies to fast-track their growth. As well as giving access to the Center of Excellence Board for strategic and operational inputs. The portfolio of Sixth Sense Ventures includes startups like Ethos, Bira 91, AVG Logistics, MyHealthcare, etc.
Conclusion
The venture capital firms in India are growing at a fast pace and supporting budding entrepreneurs with not only money but also guiding them by mentoring them and helping them grow in various aspects of different industries. Helping entrepreneurs and their startups achieve success against all odds.
Are you dreaming of starting your own start-up? You may feel you can’t as you don’t have a substantial amount of cash. This can be very disheartening, but many businesses have been “bootstrapped” into the realization that is, some others have started with practically no cash. As it is very well known that for starting a business, it’s important to knock financial resources. Venture capital is the best possible solution that can help out the people who need to start their business, but don’t have sufficient cash to look after for the same.
Venture capital or venture leasing is known for being a specific type of balance financing delivered to the early venture capital-backed companies, and we can say that to small business startups by some non-bank investors or specialized banks to an endowment working capital and capital expenditures, such as buying tools.
Venture leasing can provide counterpart venture capital, and they offer money to mounting companies as well as to their investors. Venture lending is basically provided three to four-year credit and equipment tenancy. But unlike to customary bank lending venture capital is offered to startups and growth companies that do not have significant cash flows and major resources to use them as a security. Venture lending can be viewed as a way to start for entrepreneurial companies.
If the venture capital that is provided by the lenders is organized properly, then it can be a striking option for the entrepreneurs as because firstly, it does not need a valuation for selling a business. Secondly, venture providers do not require board seats. Moreover, it also results in less equity mixing for entrepreneurs as well as for investors. Last but not the least the due diligence procedure is less meticulous as compared to equity. So, it provides cash landing field to startups so that they can achieve the following landmark.
Various kinds of venture lending or leasing
Venture commitment is structured typically as one of the three types:
First is growth capital, usually termed as loans which are used as fair play round replacements for the M&A activity, breakthrough working capital or financing.
Second is the accounts receivable financing, which means borrowing against accounts receivable items that appear on the balance sheet.
The third one is equipment financing or leasing which is termed as loans available tool acquisition like network infrastructure.
Nowadays, Venture lending or venture capital is the precious resource of capital for the growing business or startups. Because of this smart financing, people are able to develop their business which they couldn’t do prior as because they don’t have that much amount. Day by day more companies are indulging in taking venture loans from a variety of lenders so that they can catch the next milestone of their business. Most entrepreneurial companies prefer multiple portions of venture capital to enlarge their business easily and comfortably. As we have discussed above, Venture capital can be organized as a loan, or accounts receivable business line of credit or an equipment lease that is offered by so many venture lenders. There are three primary scenarios where venture debt can help to foster the company and moreover, it can finance its capital requirements more powerfully:
It encompasses the cash runway of growing business to the next milestone: when a company wants incremental money to quicken the growth of their company without taking equity then venture debt is the best option for an individual. It helps to embrace the cash runway of an entrepreneurship company to the next valuation. however, it raises the next equity round at a higher valuation. Administration, as well as staffs, would profit from a reduced amount of dilution because of smaller equity raises and on another side prevailing investors would also advantage from the less equity dilution as well as from less cash that is necessary to uphold their own position.
It extends the cash runway to profitability: Venture lending may spread the runway of a company to be “cash flow positive.” The company can use venture lending to eradicate the last round of equity financing if one use that. When the amount of capital required is too small for an equity round, then venture lending is a good option to be used. It pushes the company forward during their acute period of growth.
It also evades the down round: Undertaking loaning can serve as a beanbag when someone does not have that much amount of cash so that they can stay between equity rounds. When you feel that your business’s performance is not up to the mark, then it will likely result in rising equity at a down round. But venture capital can easily link the gap until and unless your company is again on the path.
What kind of startups should look at venture financing?
For the startups which have high visibility in the income, predictions are well-matched for the venture lending or leasing. Those companies basically have an optimistic unit of finance. Saas companies are pretty more striking to the venture lenders. Venture lenders often piggyback on the due assiduousness that is done by the venture capital firm. Whereas, on the other hand, taking a venture loan is not suitable for the startups which are having revenue stream or receivables highly. The companies whose previous loans are not clear yet, or they had a low cash balance should not use venture lending. When the loan payments rise to more than a quarter of the company’s operating options, then it is a bad idea to choose a venture loan.
When is the right time to raise loan financing?
The apt time at which an individual should rise loan financing is when it is easily reached, all business material is fresh and moreover when your company has impetus. Over time, startups are indulging venture loan as the counterpart of equity round instead of waiting a few years to raise loan round separately. By hovering over an average 20-30% of the financing round as liability, founders can save equity, and they will feel more reliable and flexible to build up their startups.
