Startups need to be scalable: Avener Capital
Closes over Rs 1-lakh-cr deals through PE, debt syndication and M&A advisory
Mumbai-based Avener Capital is an avant-garde financial advisory firm and business accelerator, focuses on "financial re-engineering" and advising companies raise capital from the private market. It also makes strategic investments in promising start-ups, thus fueling innovation and accelerating growth.
The odds of securing funding improve significantly if "start-up promoters shall be able to demonstrate viability, scalability and return prospect convincingly to the investors who have of late become cautious while writing cheques," says Shivam Bajaj, Founder and CEO of Avener Capital, in an exclusive interview with Bizz Buzz.
What do the startup promoters need to do to receive private equity and venture capital funding continuously?
As I see it, the core vision of setting up a startup is to solve real life problems and create sustainable value in a particular market segment. The startup promoters need to stick to that solution-based approach to develop market-differentiating solutions with an eye to strategically scale up their businesses and boost profitability.
If startups get their basics right and set things up for the next-level of growth, they will be able to tick all the required boxes of deal-evaluation metrics of the private equity (PE) investors and venture capital (VC) firms. The focus should be on building a viable, scalable and resilient business model capable of shaping future market trends.
The odds of securing funding improve significantly if start-up promoters demonstrate viability, scalability and return prospect convincingly to the investors who have of late become cautious while writing cheques.
India specific funds are continuing to invest in startups in the country. According to the EY-IVCA report, a total of $1.5 billion was raised across 16 funds in April 2022 compared to $569 million raised in April 2021.
Why do you think that India-specific funds have not lost their interest in the Indian startup ecosystem?
Despite global headwinds, the economy is firmly on the road to recovery. With credit card spends scaling a new high and bounce rates slipping to three-year-low, the economic activity is back on track. All these developments have encouraged India-focussed funds to maintain a bullish investment outlook.
The fund deployment strategy will mainly be driven by the aim to be a part of many startup growth stories in the making. With digital and tech adoption revolutionizing the startup landscape, fuelling growth and driving market expansion at a time when the government is intensifying efforts to put India firmly on the global map in the techade, investors can't afford to give the India growth story a miss. This will be India's decade for sure.
What are the key industry trends and opportunities for startups according to you?
As technology being the overarching theme, in my opinion, upside for growth and profitability is immense in emerging sectors such as agritech and software as a service (SaaS). For those sectors, the market is huge and mostly untapped. Due to geopolitical tensions and pandemic impact, tech-led supply chain management reset has opened growth opportunities for startups.
Consolidations are also taking place to gain access to technology, talent and markets. Digitalisation and tech adoption with a view to build resilience and become future-ready will drive growth opportunities for startups in India, going forward.
Agri-tech startups are helping in building the nation as well as building investor wealth. What are your thoughts on their contribution to the economy?
I believe every startup which adds value to the basic necessities space of food, water, and shelter, will always be an investor favourite due to the vastness in the target market it caters to, while also being a catalyst in nation-building. Startups building agricultural use drones, incorporating maybe hydroponic or stack farming practices, designing climate proof cultivation and technology have revamped the expectations about the industry.
In fact, businesses helping agriculturists to secure orders from supermarkets and fast food franchisees have helped in eliminating the intermediary issue, which was a huge deterrent in this industry. With the help of such tech-innovations, India might well be in a position to strong-arm its position as the market leader.
How do you think the startups are revolutionising B2B marketplaces, help accelerate growth for SMEs and catalyse success?
Businesses tend to face difficulties to source cheaper and superior raw material or circumventing middlemen while sourcing inventory to be sold to end users. Additionally, the buzzing D2C industry often hits a wall with online selling and fails to explore the massive offline market to multiply their revenue.
Emerging B2B startups have developed efficient platforms to resolve these hurdles for companies, which have eventually led to accelerated and sustainable growth for startups. Moreover, Avener Capital believes that the B2B startup universe bears the potential to radically upscale the performance of the entire start-up ecosystem and provide them a stepping stone towards success.
In the past few months, startups have laid off people. Should they be more conservative in hiring? What model should they follow?
The pandemic years have poured abundant liquidity in the market which propelled the rapid expansion of established startups in most industries. Eventually, with this liquidity being drawn out of the market, companies have found it difficult to please investors for subsequent funding due to the lack of long-term sustainability in their business models.
This has compelled startup founders in downsizing their workforce to keep their businesses operational. Therefore, I often say that even in this modern era, traditional business principles of valuing revenue and profitability are equally important for start-ups to thrive in the longer term.
What will be your vision/roadmap for Avener's business growth?
Avener Capital is an avant-garde financial advisory firm with over Rs 1-lakh-crore worth of deals closed in its tenure through PE, debt syndication and M&A advisory. We are experts in advising on raising funds for large infrastructure projects and capex heavy business models, to achieve optimal value for our clients.
Being an active stakeholder of the startup ecosystem, Avener's emerging chapter focusses on advising clients on closing PE/VC deals across series A and B rounds with the most favourable financial structure. We are looking forward to partner with promising companies to guide them on raising an optimal mix of capital which maximises their value and carves out their true potential.