Venture Capital funding goes down in the second quarter

Raising finance still remains one of biggest challenges faced by Indian MSMEs.Venture Capitalists (VCs) step in to the rescue of MSMEs by providing financial and intellectual capital.As for the current financial year of 2022-23, investments made by VCs have dipped for the second quarter.VC investment in India dipped in the April-June 2022 quarter (Q2) as investors shifted their focus to cash preservation in anticipation of funding becoming less easy to obtain over the next few quarters.     

VC investors in India now require companies to strengthen their paths to profitability and lower their cash burn, according to the report by KPMG.Venture financing in India surpassed $6.5 billion for the fourth consecutive quarter in Q2, and Fintech remained the hottest area of investment in India during the quarter, in addition to E-Commerce, social commerce, and gaming.While VC investment in India may be muted over the next quarter or two due to the global reduction in money supply and other factors, the country is expected to remain quite attractive to VC investors over the medium to longer term due to its relatively positive macroeconomic environment and market demographics.

“Against a backdrop of geopolitical, supply chain and economic uncertainty, overall global VC investment is falling, but several sectors, including fintech and cleantech, are beneficiaries of more selective investments,” the KPMG report emphasised.

Heading into the 3rd quarter, this trend is expected to continue as startups look to survive in an increasingly challenging environment where profitability will be of critical importance. At such a critical junction wherein funding from the venture capitalists is uncertain, it is expected that the Government should step in to provide assistance to the small businesses.

Source : https://smefutures.com/vc-funding-dips-in-q2-investors-focus-on-cash-preservation/

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