Indian startups raise $4.16 billion in equity in the first six months of 2020

Location has been a crucial aspect of the success of a business. For long, startups based in Mumbai, Bengaluru, and Delhi-NCR have retained the focus of investors due to better working environment, availability of top talent, and more.

However, this may soon change as other cities like Chennai appear to be rising on the startup funding ladder, based on the number of deals in the first six months of 2020. Similarly, even as Delhi-NCR, Bengaluru, and Mumbai retained their top spots in terms of number of deals and funding amount raised, cities like Ahmedabad, Hyderabad, and Kolkata also gained significant momentum.

Overall, Indian startups raised a total of $4.16 billion in equity funding in the first half (H1) of 2020, according to YourStory Research, the research arm of YourStory. While funding amounts fell amidst the COVID-19 pandemic that has pushed investors to string their purse, they continued to invest, viewing this as an opportunity to diversify their investments across more number of deals and identify new funding avenues and markets.

H1 2020 Indian startups EQUITY FUNDING
H1 2020 Indian startups EQUITY FUNDING

By month, March accounted for 30 percent of the total funds raised during the period. Nearly $1.23 billion in funding was dispensed over 66 deals, including Oyo Rooms’ $807 million capital infusion from SoftBank as part of its ongoing $1.5 billion Series F funding round, as well as CureFit’s $111 million Series D round.

January saw the highest number of deals by volume with 78 deals raising $912.6 million, versus 65 deals last year. Edtech platform BYJU’S $200 million raise from New York-based Tiger Global, at a valuation of $8 billion, happened in January, as did Zomato’s $150 million raise from Ant Financial. As opposed to the nearly $3 billion companies raised in the first three months, April to June saw only $1.17 billion in funding. Combined, the three months accounted for only 28.1 percent of the total funding in H1 2020 as suspension of activities due to the lockdown, coupled with a decrease in disposable income thanks to layoffs and pay cuts, depleted demand for nonessential items.

Delhi NCR-based startups saw the highest number of deals at 123 on total investments of $1.76 billion. Delhi made up about 43 percent of total investments in H1, followed by Bengaluru, with 121 deals at $1.68 billion. Ahmedabad moved to the top of the list with six deals in the period, as opposed to just two last year.

As many as 279 early-stage startups, of the total 392 companies, received $519.4 million in venture capital and private equity funding in H1 2020, compared with 264 a year ago, which raised $705.7 million.

Fewer $100 million deals The number of $100 million-equity funding deals fell to 8 in H1 2020, from 12, a year ago, totalling $1.81 billion, and accounting only for around 43.5 percent of the total investment value in H1 2020. It’s worth noting that most of these $100 million-plus deals were announced in the first three months of 2020 before the pandemic gripped the nation.

In the first half of 2020, 71 fintech firms, including DMI Group, Digit Insurance, BharatPe, LendingKart, Ola Financial Services, and MobiKwik raised a total of $899.6 million. In H1 2019, only 59 startups raised funding, but the deal value was much higher at $1.06 billion.

In H1 2020, edtech was India’s second-most funded sector after fintech and financial services, according to YourStory Research. Over $714 million in funding was raised by edtech startups across 46 deals compared to just $158 million across 20 deals in H1 2019. The 4.5X growth over the year-ago period was a result of rising demand for e-learning and online education triggered by the pandemic-induced lockdowns.

Further, Vedantu raised a Series C round in three tranches: $24 million from GGV Capital, followed by $12.56 million from Legend Capital and Omidyar’s Ohana Holding; and $6.8 million from KB Global. Vedantu also invested $2 million in a Pre-Series A round in Instasolv. Other top edtech deals in H1 2020 included:

● Surge startup Doubtnut raised $15 million in a Series A round from Tencent, Omidyar Network India, AET, Sequoia Capital India, and Curefit’s Ankit Nagori.

● InterviewBit raised $20 million in a Series A round from Sequoia Capital India, Tiger Global, and Global Founders Capital. Reliance-owned Embibe raised $12.6 million, followed by $66 million, from the parent company.

● WhiteHat Jr raised $10 million in Series A funding led by existing investors Nexus Venture Partners and Omidyar Network India.

● Classplus raised $2.5 million in a Pre-Series A round from Blume Ventures, Sequoia Capital India, Kunal Shah, Alvin Tse, and Eric Kwan, followed by $9 million in a Series A round from RTP Global.

● Testbook raised $8.34 million in a Series B round from Iron Pillar, Matrix Partners India, Better Capital, AngelList India, and Reliance Jio’s Vikas Choudhury.

● Lido Learning raised a Series B round in two tranches: $3 million from Alex Samwer’s Picus Capital, Paytm’s Madhur Deora, followed by $7.5 million from BAce Capital, along with participation from existing investors.

Key highlights

• Funding for women-founded and co-founded startups fell 44.7 percent to $269.5 million in the first six months of 2020 as compared to $487.2 million in the first half of 2019.

• Women-founded and led startups contributed only 6.5 percent to the total funding raised in the Indian startup ecosystem H1 2020.

• The total number of funding deals involving women-led startups fell 14.7 percent to 58 deals in H1 2020, compared to 68 deals in the year-ago period.

• There was a consistent decline in funding across all three stages – early, growth, and late in H1 2020 when compared to H1 2019.

• The edtech segment received the highest quantum of funding at $93.6 million over seven deals, followed by healthcare at $34.7 million.

• Bengaluru retained its position as the leading destination for women-led startups with a total funding of $104.3 million in H1 2020, across 15 deals. Delhi-NCR tops the list for the most deals though with 22; startups in the region raised $65.2 million.

In the first half of 2020, when it comes to women-led startups, the edtech segment witnessed the highest funding — $94 million across seven deals — followed by healthcare, which garnered $35 million across three deals. Embibe, which was acquired by Reliance Industries, was the largest transaction at $78.5 million, followed by Nykaa at $25 million.

Bengaluru retained the top spot as the leading destination for women-led startups, with a total funding of $104 million cutting across 15 deals in the first half of 2020. However, it was much lesser than the $193 million invested in the same period in 2019. Delhi-NCR came in at second spot, with total funding of $65 million and 22 deals.

According to YourStory Research, the number of funding deals in Chennai-based startups jumped about 31 percent to 17 in the first six months of 2020, up from 13 deals in H1 2019 and 10 in H1 2018.

 While startups are working to resolve the global crisis, the healthtech and healthcare space has seen funding drop 34.4 percent in the last six months. According to YourStory Research data, the healthtech/healthcare sector received $110.8 million in funding across 24 startups.

Source> YourStory Research report

One comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s