Better Capital emerges as top pre-seed funding firm in India this year

Vaibhav Domkundwar, founder and CEO of Better Capital, said they had become the largest by amount deployed and the number of investments in pre-stage companies. According to Venture Intelligence, Better Capital leads by number of new investments and was followed by Blume Ventures and Sequoia Capital India. Around $1 billion funding has gone into early stage companies in 2022. Pre-seed is the earliest stage of funding which is used to develop the product.

Better Capital, set up in 2018 in Pune and San Francisco, has 200 companies in its portfolio with two of them, Slice and Open, turning unicorns. The combined valuation of Better Capital funded startups was now at $7 billion.

“Pune has a rich startup ecosystem brewing but it has never had enough local capital to further nurture the ecosystem. We started changing that by first making Pune our India HQ, then investing in top-tier Pune-based teams and we were able to bring global investors to think about Pune in their India itineraries to either visit us or our portfolio companies or several new companies that are being started in Pune,” Domkundwar said.

In 2022, Better Capital made 50-plus new investments, 25 follow-on investments, and $30 million. The investment was split between pre-seed (65%) and seed (35%).

Around 75% of the funding in 2022 had gone to B2B companies and the rest to B2C startups with an average cheque size range in the $250,000 to $500,000 range. The year saw the firm making eight exits and M&As.

Domkundwar launched the country’s first solo General Partner Fund-1 of $20 million, fully deployed with 20 markups within the first 15 months. Fund 2 is in the making.

Better Capital invested in all of them at the early stage and was the very first investor in many and now has a portfolio of 200 companies with cumulative investments of $80 million deployed at pre-seed and seed stages. Apart from two unicorns, there are five startups in the $500 million to $1 billion valuation, 12 companies with a valuation of $100-500 million and 19 companies in the $50-100 million valuation range.

Better Capital-backed Open became India’s 100th unicorn in the country and received investments from Temasek and Google. Cardlewise is now backed by Silicon Valley venture firm CRV while fintech company, Slice is now backed by Tiger Global and Insight Partners. Gold loan innovator Rupeek received investments from GGV Capital, Sequoia and Accel. Insight Partners funded banking infrastructure leader M2P while edtech company, Teachmint was backed by Learn Capital. Tutoring innovator Filo is now backed by Anthos. GMO Venture Partners and Mirae Asset funded rural tech company, Jai Kisan.

Over the past decade, Pune has become home to a host of unicorns including FirstCry, ExpressBees, MindTickle, Druva, Pubmatic and others who laid the foundation of a high-quality startup ecosystem in the city. However, lack of high-quality venture capital remained a big missing piece,” Domkumdwar said.

“Pune founders are used to travelling to Mumbai or Bangalore to meet investors – local as well as global ones. That is now starting to change slowly and Better Capital is playing its small part as global investors are visiting Pune not just to meet Better but also to meet their portfolio companies as well as others in Pune to keep an eye as the city’s ecosystem evolves fast.” Domkundwar said.