Investment slowdown would possibly hit long run deal pipeline, says QED – Trade Information

Even as deal activity in the seed and pre-Series A stages has picked up, the broader slowdown in the number of startup funding deals, which began in mid-2022, can dampen the future pipeline of deals, said Sandeep Patil, partner and head of Asia, QED Investors, a fintech-focused VC fund.

“The overall activity is much lower than it was, both in dollar value of the deals and in the number of deals. And the number of deals worries us a bit more because it affects the pipeline going forward. What is the seed investment this year becomes a series A investment next year, and becomes a growth investment in a few years. So, a slowdown in investments today can slow down the pipeline in future,” Patil said in an interaction with FE.

QED’s $4.5 billion global portfolio includes companies such as digital credit score platform OneCard and neobank Jupiter. The firm, which began investments in India a few years ago, has so far invested $150 million into the local market.

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It has recently raised $925 million for two new funds and continues to see India as a bright spot for future investment. “India has a very strong story, so I think investors like us, private investors, will continue to find India investments very attractive,” Patil said.

He said an interesting trend in the startup ecosystem is that some growth-stage companies are thinking of going public rather than trying to raise private equity, as the threshold for raising public money in India is lower and the public market multiples are very strong.

“Public market investors have demonstrated a good appetite for startups and technology companies. Multiples from a private investor tend to be lower than what an Indian public market would offer. So, if you’re profitable, you’re doing well, you can have a public story,” he added.