Existing investors throw lifelines to late-stage startups in choppy waters

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₹105 crore. The cloud-based technology venture that converts standard websites into mobile-ready versions, started in 2009 as Mobstac. It had raised its first seed venture capital funding at a valuation of ₹7.7 crore, led by Accel and Mumbai Angels, with Blume Ventures joining in a secondary sale of shares later that year.

For about a decade between the two rounds, existing investors kept ploughing in capital every few years to keep the ball rolling, with no new names joining Uniqode’s cap table. It was only in 2023 that the company raised a $25 million Series A round, led by San Francisco-based Telescope Partners, at a valuation of ₹1,155 crore, giving an exit to some of its early investors, including Blume Ventures. Uniqode is not alone.

Startups in India often rely on their early investors to help them bridge the death valley—a period in the life of a startup in which it has begun operations but has not yet generated revenue. Historically, it had been limited to the early stages because startups would have very little to show for in terms of revenue and profits to attract new investors. But that changed after the funding frenzy of 2021 and 2022.

As the startup ecosystem’s funding well began drying up towards the end of 2022, many startups have had to stretch the funds from their last raise that happened over 24 months ago. Even as startups work on improving their unit economics, and chase profitability to grow into their last round valuation, the funds in the bank are now on the brink of exhaustion for many. A short runway haunts startups as they fail to gather enough interest from new investors to write a cheque.