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As VCs stay away, angels come to the rescue of growth-stage startups

With venture capital firms hoarding funds for their portfolio companies because of the Covid pandemic, angel investors are moving in and writing bolder cheques in these late-stage startups

July 24, 2020 / 21:01 IST
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Image by Tumisu from Pixabay

In March, Vinay Bansal, Chief Executive of Inflection Point Ventures, a consortium of angel investors, came to the rescue of hyperlocal delivery firm Milkbasket after it reportedly failed to raise its much-touted $50 million round.

Uncertainty around the cash-guzzling hyperlocal delivery model and the changing market scenario around the pandemic had led venture capital (VC) funds to maintain a safe distance from the company.

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So, instead of looking at a potential down-round with larger VCs, according to sources, the company chose to raise a bridge round at the previous round’s valuation, with the angels coming into the picture for working capital funding.

The fund is helping the company improve its unit economics at a time when a large round is unlikely to happen.