Startups in India raised $9.3bn in 2020


Despite the coronavirus pandemic negatively affecting many sectors of the booming Indian startup culture this year, investors have poured in $9.3 billion into the country, according to the consultancy firm Tracxn. While, this is a huge drop from the record $14.5 billion that was invested last year, the numbers show signs of recovery.

While the first half saw $4.2 billion coming in the borders of the world’s second-largest internet market, the second half was much bigger, mainly due to restrictions being uplifted in a huge part of the country and businesses returning.

About 1088 deals were made in 2020, which is significantly lower compared to last year’s 1185. Moreover, there were fewer $100-million funding rounds this year, but these accounted for about $3.6 billion of the total amount raised, Tracxn data showed.

Although there is a certain drop compared to previous years, the amount raised was still significant, and higher than what was raised in 2016. This means that the interest of investors, globally as well as domestic, has prevailed.

Other than the coronavirus, which has impacted startups worldwide, another factor that impacted the deal-making was the absence of — or reduced participation from — some of the biggest investors.

Chinese giants such as Alibaba — and its affiliate Ant Group — and Tencent wrote fewer checks this year to Indian startups amid tension between the two neighboring nations. SoftBank also delivered less capital as many of its high-profile portfolio firms including Paytm, Oyo Rooms, and Ola did not raise money.

This year also saw a stark rise in mergers and acquisitions between companies. Some of the major ones were the acquisition of furniture and décor Urban ladder and Indian online pharmacy Netmeds by Reliance Industries and e-learning platform WhiteHat Jr by Byju’s.

Consumer healthcare, SMB SaaS (Software-as-a-Service), fintech, e-grocery, ed-tech and med-tech sectors saw company valuations ballooning, as startups started realigning business models to manage their way through the coronavirus lockdown.

11 Indian startups also became unicorn this year, which include the likes of Glance and Dailyhunt, which were backed by Google a few days ago, as well as Unacademy, which saw funding from Facebook.

Compared to last year, 2020 has been a year of higher deal velocity.

“I am old enough (unfortunately!) to have seen the 2001 and 2008 downturns so when Covid hit and there were stories of doom and gloom everywhere, I remembered what I saw happening in the past downturns — a beginning of a new generation of teams who built the next generation of companies,” said Vaibhav Domkundwar, founder and managing partner at Better Capital.

However, for the first time, startups in India are beginning to see another kind of exit. Companies like Zomato, Flipkart, and Policybazaar are some that are planning to go public next year.

Many analysts at Bernstein have claimed that Paytm, Byju’s, PhonePe, and Delhivery could also be joining the bandwagon.