Accel launches Atoms program to back early stage startups

2021 has been a blockbuster year for startup funding in India, and it looks like investors don’t want to miss out on investing in promising startups. Venture capital firm Accel said it has launched a pre-seed funding program called Atoms where it will invest $250,000 in early-stage startups.  

This should be good news in a market that was increasingly favouring large funding rounds for a few firms in recent months. 

Different from early-stage startup funding programs

Silicon Valley-based Sequoia also runs a similar rapid scale-up program in India called Surge under Sequoia Capital India.  

However, Accel will make investments through Atoms as an “uncapped convertible note”, meaning that it will convert into equity only in the next round of the startup’s funding. It said that even early-stage startups that don’t yet have a product, customers or revenue can still apply for the Atoms program. 

Atoms, led by Prayank Swaroop, will invest in startups from a myriad of segments including D2C brands, consumer apps, B2B marketplaces, fintech, cybersecurity, SaaS, and healthtech among others. 

Accel Atoms is part of the sixth Accel fund, worth $550 million, which the firm had announced in December 2019. 

The firm said it has invested in a couple of startups but is looking to onboard more startups following a public launch of the Atoms program. Via the program, it is looking to back startups in India and Southeast Asia.

“We can join any round that a startup is raising e.g. if a startup is planning to raise $500K from angels, we can be part of that $500K or we are ok to add $250K to the $500K round and make it $750K. We don’t change the terms of their $500K round, in fact, our investment will be a $250K uncapped convertible,” Accel said in a press statement.

Track record of Accel in India

Accel has had a prolific track record of identifying promising startups in India and backing them. Its portfolio includes unicorns like Urban Company, Freshworks, Flipkart, Swiggy, Mindtickle, Zenoti, BrowserStack, Chargebee, Moglix, Eruditus and Zetwerk.

Besides unicorn startups, Accel has also made early-stage investments in 2021 which include Mensa Brands, Captain Fresh, Fashinza, Powerplay and CreatorStack.

2021, not just a great year for startups, but also VC exits

2021 has been a monumental year for Indian startups so far. 25 new unicorns have already been minted so far this year, and more startups could join the coveted list before the year draws to a close.  Along with the huge fundraising have come multiple exits for investors ranging from angels to VC’s to PE funds.  

That, coupled with Zomato's successful IPO along with many other startups standing in line to go public including Paytm, Nykaa and PolicyBazaar marks a remarkable coming of age for India’s startup ecosystem for founders and investors.

Incredibly, issues like Cartrade, which were a 100% offer for sale by existing stakeholders, have also sailed through. 

Venture capital firms, flush with fresh funds and validation of their picks, are still keen to stay in, a good sign for a market that many feel is getting overheated. 

VC’s for early-stage adding up  

Last week, Prime Venture Partners announced its fourth fund of $100 million with a first close of $75 million to invest in early-stage startups. Earlier this month, Stellaris Venture Partners said it has raised $225 million for its second India-dedicated fund. Before that, Chiratae Ventures had closed its fourth fund at $337 million. In January, Mirae Asset launched an early-stage focused fund for startups in the country worth $35 million.