Founders are also increasingly turning to investment banks, as against during the funding boom, when entrepreneurs would close deals independently.
Companies that haven’t seen a round in the past few years are seeing $20-30 million primary rounds, and those closer to an IPO (public listing) or an M&A, are seeing secondary interest, said The Rainmaker Group’s Chanchani. Banker-led deals have increased substantially also because assistance is needed for secondary processes and the pools of capital are seeing rapid churn, he said.
Chanchani said January-March was Rainmaker’s best quarter, when it closed seven deals, following a standstill in the previous four to five months.
Shivakumar Ramaswami, founder and director of IndigoEdge, said the investment banking firm facilitated four deals in the previous quarter and three in the December quarter. What has changed is on the growth side, he said. Private equity or sovereign funds that are much more measured are taking their time for diligence and are pricing rounds the way they want to. Having said that, easy money that was flowing earlier from hedge funds and crossover funds is not there.
A Mumbai-based banker said that in addition to domestic investors and family offices, private equity and sovereign funds are also getting into tech investing in a big way. But their timelines for closing deals are longer, at nine to 12 months, he said.
Founders, especially in the early stage, are turning to investment banks to raise capital, unlike fundraises till 2022. At the time, sentiment was still in favour of founders… Being an operationally healthy company, we could command terms, said a Gurgaon-based founder of a mobility startup, currently in the market to raise $40-45 million.
