Investor's choice startup sectors in 2020-21

Startups in warrior segment will be the investor’s choice in 2020-21

Year 2020 is the time for being safe and survival. Business models need to be rethink and structured in innovative ways.

The focus of entrepreneur will be to consolidate the business, retain old customers and find new customers with less acquisition cost. One has to take risk but measurable and under control so as to keep the venture going. 

Investors will now prefer the startups that have successfully implemented their ideas and delivered the proof of concept (PoC). As it is time to quickly execute the business operations and scale to resolve the problems of masses. The covid 19 pandemic has brought new opportunities for few sectors and compelled many businesses to shift to digital platforms. 

Following sectors have been getting great response from consumers and attracting investors for funding -

Edtech – recently funded startups in edtech sector – Vedantu, gradeup, classplus

FMCG & Grocery

Enterprise SaaS – CRM, ERP, IVR, etc.

Health-tech & Hygiene - Esperer Onco Nutrition

Logistics & supply chain - FarEye

OTT/ content – daily hunt raised next round, Tock

Gaming – Ewar app

Conferencing and chat apps

Robotics

Fintech – setu, navi got funding from investors

Startups shall relook their product, make amendments in product, service or business model.  Once its proven to be a perfect product-market fit with low investments arranged from their savings, family & friends, Education Institutions’ grants, Incubators, etc and then later they can go to Angel Investors or early stage funds for raising growth funding. 

A successful Business Model might needs kick start resources including funding and may be some ‘growth capital’ later on but not the ‘sustaining capital’. 

In Q4 2019-20 there was 45% de-growth in startup funding as compared to Q3. But positive side is over 40 prospective startups could raise $550 mn in such a storm, which signals that there is no dearth of funds in India only required is the well thought out business plan with enthusiastic & passionate team to lead the way.

Investors like light speed venture, Eight roads, ICICI Venture, Falcon, SIDBI are actively investing in Q1 2020-21.

Therefore, Investor choice for this year will be startups that have achieved initial milestones which can be in terms of revenue, user base, number of transactions on platform, analytic & database, etc. These figures will enable investors to derive the potential of idea and capabilities of team. 

Also many investors are looking for innovative ideas in above sector but which are scalable with advance technologies like Blockchain, Artificial Intelligence (AI), Machine learning (ML), Data analytics (DA), Digital currencies, etc.