Early Stage Investors Need To Identify Sectoral Trends Early For Big Gains: Rajan Anandan

Early stage investors must identify sectoral trends early for maximum gains and not just follow what everyone is doing, according to Rajan Anandan, MD of Peak XV Partners and Surge.

Speaking at a fireside chat at MoneyX, Inc42’s flagship investor event, Rajan Anandan said that by the time a sector starts gaining recognition, it is too late for angel investors and micro venture capitalists (Micro VCs) to invest in startups from the segment.

“By the time a sector is hot, as a micro VC and an angel fund, it’s too late (to invest),” said Anandan, adding that showing up when the trend has started is a guarantee to lose money.

Talking about upcoming sectors like AI, the Peak XV MD said, “If you’re investing when the trend starts, it’s too late.”

Talking about sectors, Anandan said India is set to add $2 Tn in domestic consumption in the next few years, which provides a great opportunity for certain segments within India’s D2C landscape.

The comments come at a time when funding winter has engulfed the Indian startup ecosystem. As per data compiled by Inc42, Indian startups raised $5.4 Bn across 462 funding deals in H1 2023, a 10% and 25% decline in funding amount and deals, respectively, compared to H2 2022. On a year-on-year basis, startup funding declined 72% in H1 2023. 

However, Anandan said he believes this is not a funding winter as the growth trajectory of Indian startup funding and the ecosystem has remained unchanged in the long run. He said the recent decline is because of the funding boom at the peak of the pandemic.

In the conversation with Inc42 CEO Vaibhav Vardhan at MoneyX, Rajan Anandan also said that Peak XV Partners is sitting on INR 20,000 Cr (around $2.44 Bn) worth of dry powder, adding that India does not have a capital problem right now.

As per Inc42 data, 2023 has seen more than $8.5 Bn of dry powder raised by investors in Indian startups, with 48 funds being launched so far this year.

Presented in partnership with Peak XV Partners, supported by Venture Catalysts, JSA, Samsung, IVCA Associates, Indian Angel Network, JIIF and Marwari Catalysts, MoneyX is aimed at bringing the driving forces of the Indian startup ecosystem under a single roof. 

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