Investment activity to surge, valuations rationalising in consumer sector: Gemba Capital
Gemba Capital, a Sebi-registered micro VC, said it expects investment activity will surge, helped by early-stage pure-play consumer tech startups growing into successful late-stage companies and venture capitalists actively looking to deploy capital into pure-play consumer tech startups.
Over the past 2-3 years, there has been a decline in investment activity in pure-play consumer tech companies across stages. From a peak of $21 billion in 2021, investment activity declined to $4 billion in 2023. Also, the decline is visible across stages, where late-stage funding declined to $3 billion in 2023 from $18 billion in 2021.
«In the consumer tech sector, the valuations have seen a rationalisation. This is mostly because the evaluation criteria have become more stringent, with investors exercising more caution before investing in early-stage consumer tech startups. In sectors such as edtech and health tech, we have seen a further rationalisation in valuations,» Govinda Lohia, principal, Gemba Capital, said.
«Despite this, we believe that in every subsector, there will always be startups that will command relatively higher valuations on account of the quality of the founding team, market size, scalability, unit economics, etc.»
With the recent surge in consumer spending on digital products, experiences and services, investors are already seeing green shoots of a sharp uprise in consumer tech investment activity. Sectors such as gaming, digital entertainment, consumer fintech and proptech are seeing a slew of investment
