The coronavirus pandemic — and a handful of different components — slowed dealmaking for startups in India this yr.
In comparison with their record $14.5 billion fundraise last year, Indian startups are ending 2020 with about $9.3 billion. That is the primary time since 2016 that startups in India, one of many world’s largest startup communities, has raised lower than $10 billion in a yr, in response to consultancy agency Tracxn.
The variety of offers fell from 1,185 final yr to 1,088 in 2020. There have been fewer bigger sized rounds, too. Rounds with dealsize $100 million or bigger fell from 26 in 2019 to twenty (these rounds delivered $3.6 billion this yr, in comparison with $7.5 billion final yr), and equally rounds with dealsize $50 million to $100 million fell from 27 to 13. (The figures don’t embrace investments in telecom big Jio Platforms, which alone raised over $20 billion this yr.)
Regardless of the slowdown, Indian startups noticed substantial rebound within the second half of this yr. Within the first half, startups on the planet’s second largest web market had raised simply $4.2 billion from about 461 offers, stated Tracxn.
Aside from the coronavirus, which has impacted startups worldwide, one other issue that impacted the dealmaking was absence of — or lowered participation from — a number of the greatest traders.
Chinese language giants equivalent to Alibaba — and its affiliate Ant Group — and Tencent wrote fewer checks this year to Indian startups amid tension between the two neighboring nations. SoftBank additionally delivered much less capital as a lot of its high-profile portfolio corporations together with Paytm, Oyo Rooms, and Ola didn’t elevate cash.
However the virus additionally accelerated development of some startups. Byju’s is now valued at over $11 billion, up from $8 billion in January this year. Unacademy, one other high-profile startup within the on-line studying area, raised two rounds on the peak of the pandemic, growing its valuation from about $500 million in February this yr to over $2 billion.
Bond, a agency began by Mary Meeker and different high-profile traders, backed Byju’s this year. Bond believes that Byju’s will probably be value over $30 billion in three years, an individual who was briefed by the funding agency instructed TechCrunch. A number of startups in India operating on a SaaS model and catering to prospects worldwide additionally picked up momentum this year.
11 Indian startups together with RazorPay, Unacademy, DailyHunt, and Look turned a unicorn this yr. (On a facet be aware, Google and Fb wrote a number of checks to Indian corporations this yr. Google backed Glance and DailyHunt last week, whereas Fb invested in Unacademy. Each the corporations additionally invested in Jio Platforms this year.)
“I’m sufficiently old (sadly!) to have seen the 2001 and 2008 downturns so when Covid hit and there have been tales of doom and gloom in all places, I remembered what I noticed taking place prior to now downturns — a starting of a brand new technology of groups who constructed the subsequent technology of firms,” stated Vaibhav Domkundwar, founder and managing associate at Higher Capital. Higher Capital, which backs early stage startups in India, wrote 43 funding and follow-on checks this yr.
M&A actions additionally accelerated this yr. Byju’s acquired WhiteHat Jr for $300 million, whereas Unacademy acquired PrepLadder, which provides programs aimed toward medical college students, for $50 million in July. It additionally led an funding spherical of $5 million to amass a majority stake in Mastree.
Reliance Industries acquired on-line pharmacy Nedmeds and, in a fire sale, Urban Ladder.
However for the primary time, Indian startups are on the verge of seeing one other form of exit. Zomato, Flipkart, and Policybazaar are amongst some startups that plan to go public next year. Analysts at Bernstein have recognized Paytm, Byju’s, PhonePe, and Delhivery amongst those that may additionally go public by 2022.