A Word of Advice- Build a Real Company Better Capital works on a hypothesis that no bridge rounds are raised to extend the runway. Instead, startups need to prove with data that they will be able to raise a proper next round.
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Having been in the venture capital ecosystem for 20 years as a founder and five years as an investor now, Vaibhav is clear about what Better Capital is looking to back and support founders who want to build a real company and not one only running on VC fuel.
However, he knows, looking at the current market scenario, that it's easier said than done. "The amount of capital has definitely dried up in venture. While everybody will maintain that its business usual, everybody who says that business is usual is actually confirming that the business is not usual. So it is going to be difficult and we are seeing that," shares Vaibhav Domkundwar, Founder and General Partner, Better Capital.
The firm has made strategic investments in over 200 startups and has made a strong emphasis on lean operations since 2022. According to him, burn and runway are an outcome; amid this, the firm has seen one thing workwhen founders say this is what I need to solve, and this is what I need to do for it. He shares that the companies that are profitable with a clear roadmap for the next three years will be the ones who will be able to raise funds at the hardest rounds of Series B and C.
Talking about whether we'll see more bridge rounds, Domkundwar shares a yes and a no. Yes, the ecosystem will see a lot of bridge rounds, and no, Better Capital will continue raising full rounds. Better Capital works on a hypothesis that no bridge rounds are raised to extend the runway. Instead, startups need to prove with data that they will be able to raise a proper next round.
So, any particular company he'll want to safeguard with capital? "All of them. I always believe that the last reason I want to fail for is lack of capital. If something is not working, raising a bridge round is not the right thing for me. But when something is working, then we'll go and find capital for our companies, come what may."
Better Capital and Domkundwar believe that the next 18 months will continue to be hard and only 2025 onwards one can expect things to go back to normal.
FACTSHEET:
No. of startups invested in: (Since inception)- 205 (In FY22-23)- 40
No. of exists: (Since inception)- 12 (In FY22-23)- 4
Focus sectors: (2023 & onwards) AI Software, Vertical SaaS, Horizontal SaaS, Climate, Specialized Global Services
Fund Size: AUM $100M. Funds are $20M-$25M in size
Ticket Size: $300K - $1M
