Startup funding in the country has seen a late-stage boom, with more deals of $100 million or above being closed in the first five months of this year than in the first half of the last two years.
Deal-making has also broadened, across companies and sectors, moving away from a few large companies such as Ola, PayTM and Flipkart that used to top fundraising charts every year.
What this means is that now all sorts of Indian startups have reached a maturity level that allows them to be funded easily than before and thus the overall situation of the Indian startup ecosystem is on the rise.
Startups in India have raised a record $3.9 billion from venture capitalists in the half year entered 30 June, as the world’s greatest financial specialists multiplied down on their wagers in the notion floated by the Flipkart-Walmart arrangement a year ago. There’s a separate statistic which shows that there has been a 44% jump when you consider 292 deals entered into, by Indian startups.
Startups in India seem to be having a great time currently, at least in terms of their being able to raise funds from investors. Some have ascribed this to the mega $16 billion deal which saw US retail giant Walmart acquire a pure-play Indian e-commerce startup Flipkart.
Whether that is the key turning point or not, the fact remains that venture capitalists have been loosening their purse strings on Indian startups as evidenced by the figures. The funds raised by Indian startups in the first half of 2019 stood at $3.9 billion, just $300 million less than what they got in the whole of 2018, which was $4.2 billion.
The interests in 2019 are likewise to the entire year ventures of $4.2 billion and $4.3 billion out of 2016 and 2017, individually, showing the flood of capital portion in the previous a half year.
The information characterizes funding conjecture as seed, or all-around early ventures, to Series F deals in organizations that are under 10 years of age.
- Some amount of sorting out has also happened by now; there are those with large direct consumer bases in the B2C segment and the ones that are operating in the B2B space. Then there are the business verticals or segments, like fintech, agritech, healthcare and so on.
- Areas like software and logistics are typically in the B2B model while there is quite a number, led by startups like Swiggy and Ola who have a customer base comprising people of different age groups and socio-economic classes.
- While purchaser web firms have been proceeding to raise a lot of capital, business-to-business (B2B) organizations in areas, for example, coordination’s, programming and commercial centers are likewise fund-raising at this point.
- 2019 will additionally be about the rise of Tier II and III urban communities and B2B models, the two of which had been truly underinvested in.
The other key factor for this spurt in investments could be that in the years since these companies came into existence, there has been the segregation of the men from the boys.
The ones that managed to do well and crossed the break-even points are automatically the ones the investors seek to invest in.
Ongoing arrangements, particularly the $16 billion procurement of India’s online retailer Flipkart by US retail goliath Walmart a year ago, baited more financial specialists to India.
That arrangement saw speculators in Flipkart make 1.5-multiple times their speculations, with billion-dollar exits for funding firm Accel Partners, Japan’s SoftBank Group Corp., South Africa’s Naspers and US-based Tiger Global Management LLC.
Post the Flipkart exit, there is an expanded trust in the India showcase that you can get huge results and get liquidity. Till then there were dependably inquiries on whether cash from India will return or not. The scenario, however, has changed no
“I do believe valuations have gone up, not just at the top end of the market for large rounds, but also at the earlier stages… As an investor, I would rather pay a slightly higher price for a higher quality business than get a bargain valuation for an inefficient company,” said Murthy at Lightbox.
Another significant outcome to emerge out of these experiences is that the investors have come to appreciate the potential the tier 2 and tier 3 cities offer in the Indian context, and how startups that can exploit this potential too received their attention.
The rub-off effect from the Walmart-Flipkart deal cannot be underestimated either. The VCs and other investors who reaped huge gains from that deal have plowed back their earnings into other startups. Others who have been on the fence watching the Indian startup scene develop have also gained confidence from the Flipkart deal and have opened up.