Capital flows to startups continued at an increased pace in the latest quarter as global investors carried on signing huge cheques for entrepreneurs building the next biggie in areas from financial technology to software services, bucking the slowing growth in the economy. But the rush of capital, which has led to valuation of some startups multiplying overnight without any significant change in business metrics, is also causing concern among investors of a ‘bubble’. This, even as global sentiment turns against highly valued private technology companies with the failure of WeWork’s public offering in the US.
You might also be interested to read: Samsung Ends Mobile Phone Production In China As It Expands Facility In India
Total money poured into startups increased by 25% to $10.9 billion in the first nine months of 2019 as compared to the same period in the previous year, even as the total number of deals fell by 26% to 937 transactions, according to the latest data from Tracxn. The data increasingly indicates that the boom in financing is being led by mid and late-stage rounds of rounds of over $50 million, and is now trickling down to even early-stage transactions. “Right now, all 3 Vs of a ‘bubble’ are at play in the technology investing world — volume (number of investments), value (valuations vs fundamentals) and velocity (time to an investment decision and/or markups between rounds),” said Avnish Bajaj, MD at Matrix Partners India, an early backer of companies like Ola and Quikr.
Source: Economic Times
