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Almost 45% of entrepreneurs who get seed-stage funding for their startups are second-time founders, according to a report by venture capital firm Jungle Ventures . At $1.2 million, the median funding raised by these companies is three times the overall median of $0.
4 million, it said. These founders are raising significantly more funds than those by first-time entrepreneurs, and their businesses are largely concentrated on the top-ten funded sectors, such as fintech, retail, enterprise and healthtech, said the report, titled ‘The First Cheque Report 2024’. "Despite whatever has happened as first-time founders, these people are coming back and starting a second startup.
These second-time founders are still pursuing their ventures instead of going back to corporate jobs and are raising money,” Jungle Ventures founding partner Amit Anand said. Investment amounts and deal counts in the seed stage have been decreasing since the boom of 2022, but have started showing early signs of stabilising, Anand said. The total seed funding in 2024 so far stands just over $1 billion, nearly matching the $1.
2 billion raised in 2023 and compared with $1.9 billion in 2022. “The amount of capital going into seed-stage companies, while it may have come off a historical high and you should never look at those spikes as a norm, I think the good news here is that it's at least stabilised now,” said Anand.
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“The growth investor amounts can go up and down depending upon how companies graduate or not. But seed investing is really how many new companies get formed every year and how many of them are able to raise money,” he added. Discover the stories of your interest Blockchain 5 Stories Cyber-safety 7 Stories Fintech 9 Stories E-comm 9 Stories ML 8 Stories Edtech 6 Stories A partner at an early-stage venture capital firm told ET that investors are now taking a harder look at startups even in their infancy stages.
“Certain aspects such as product-market fit, the early ability to grow beyond a given scale, and the founders’ ability to run a business of a certain scale are coming into question now,” he said. “Some of the conversations that were typically happening later in a startup’s journey are now happening at a much earlier stage..
.this is also leading to not many of the ventures getting follow-on rounds,” he added. In October, ET reported citing data from Venture Intelligence that only one in four seed-funded startups go on to raise follow-on funding.
According to Jungle Ventures’ Anand, deals are consolidating, with a smaller number of deals attracting larger amounts of funding. “Founders and investors have realised that we are in a very complex market and it requires more capital to demonstrate product market fit to help companies be more successful,” he said. A majority of seed deals are closed in Bengaluru, followed by the National Capital Region and Mumbai, the report said.
It also showed that 81% of startups have two or more cofounders, while only 19% that raised seed funding have a single founder. Blockchain and healthcare are emerging as new themes, with investors actively seeking opportunities in these areas, Anand said. “Blockchain back in the day was a little bit more of an experimental area for a lot of people.
But now I think the dust has settled and some good projects are getting validation and (attracting) more capital in the blockchain space,” he said. “Healthcare is also exciting as a lot of M&As are happening, much more than in technology. So, you have the listing option, but you also have an option to do M&As and get liquidity through that,” he added.
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