All the data (well almost) you need around Seed Investments in India

I end up having discussions with many entrepreneurs (incl. friends who are starting up) around fundraising. More often than not, by the end of the discussion, the talks hover around valuations. My position is more often than not, don’t worry so much about the valuation. While it is a very important aspect, there are other factors that should be equally important like:

  • How much are you raising?
  • Where will that take you in terms of traction, product development, team, market acceptance etc?
  • Who are you raising from?
  • What are the terms of the deal?

In general I end up telling entrepreneurs that in case you’re raising from VCs, expect to dilute 20–25% regardless of the amount you’re seeking (turns out things have become better on that front over the last couple of years and that number now is in the 15–20% range), especially for your first round. I sometimes end up saying that maybe for the first round, if you’re really really young as a company (and if you don’t have a stellar team on paper), perhaps you’re better off raising your first round (< 1M) from Angels. All this is based in general on what I have seen over the last 4–5 years. While I have (and continue to) recommend convertible notes in some cases, I do realize that unless you’re an idea stage company, it makes sense to go with a priced round, it just makes for a cleaner transaction.

I decided to go through historical data and put down the data from the last 5 years when it comes to seed rounds to see what story the data says. As one of the values of Belong (the company I co-founded) is “Remember we’re all human, but data is a friend”

First a disclaimer, this data is only of seed rounds of companies primarily based or having significant operations in India (i.e the first disclosed rounds of the companies). To give a sense of the macro picture:

  • Time period: 2012–2017
  • Total companies/rounds considered: 293
  • Largest round: $2.2M
  • Smallest round: $40K
  • Largest Dilution: 86.4% (for 250K)
  • Smallest Dilution: 3.6% (for 100K)

Now lets look at what the data tells us:

Median Dilution across all the companies (regardless of the round size) comes to about 20.9% , which means on an average regardless of how much you’re raising, the data suggests that you’re going to dilute about a fifth of your company.

Median Amount raised for a seed round in India ($ USD) is about $420K, which is a little less than half a million dollars.

Single Occupancy? Double Occupancy? or Family Room? Out of the 293 companies, 154 (52.5%) had more than one investor

Give me an angel? Out of the 293 companies, 129 (44%) of them had angel investors. (Honestly I am a little skeptical of this data point, my hunch is that this number is much higher around 80–85% mark. I fear that in many cases, unless the Angel is a celebrity or has some weight, it goes unreported :))

Does the city matter?

Looks like it does. BLR companies on average end up raising more for more dilution and NCR companies end up raising lesser for lesser dilution. Other end up with worse deals.

Ofcourse one big thing to keep in mind is that the valuation gets decided not so much by the city, but by the investors and the competitive landscape and the space and a bunch of other factors. But in general, it’s possibly not such a bad thought that the location does play a role in a bunch of factors such as customer proximity, the kind of talent you’re going to find (especially for niche technologies or functions), the kinds of local investors and angels who might lead your round and the kind of interest you might be able to generate from multiple funds (due to their proximity).

How did we get here? A time series analysis

And we’d like to look at how these medians have changed over the last 5 years, here’s what it looks like

The number in brackets in x axis are the number of deals in that year

From 2014 onwards, the median amounts have risen. This could be attributed to:

  • Many funds coming into the market.
  • Demarkation of the seed investor slowly going away. I remember in 2012, there was a very clear demarkation between who a Series A investor was and who was a seed investor and who put in Series B and onwards.
  • Some of the large global hedge funds, who started participating Series A onwards, might have led to some of the seed investors being a little more risk averse when it came to putting in the first cheque.
  • Funds themselves started raising larger funds
  • Investment themes becoming more apparent (with the rise of e-commerce and vertical specific themes and the whole offline to online, to payments to what not)

What’s interesting isn’t just the average amount going up, but also the average dilution coming down.

Meaning that in general, the final valuation of the company post the seed round started going up.

Also note: I’d be very careful to interpret anything from the 2017 data since it has only 3 data points.

Incase you’re thinking about how much legal fees to pay as you’re going for your seed round, maybe this post could be of help (TL:DR it’s around 0.6%–1.5% of the round, the higher the round the lower the % should be)


  • I’d imagine the number of seed deals that happened in the last 5 years to be much more than 290 odd in India. But even still, 290 is a good enough number and includes pretty much all the well known companies as well as enough not so well known companies as well as all the major investors and not so well known investors.
  • I have not accounted for currency fluctuations in my analysis. As you think about cash flow, it’s something to factor in (since a 20% fluctuation in currency in a $500K round is almost a crore in rupees)