2021 has seen immense growth in investments into Indian startups. This growth has shattered all previous records and new benchmarks are being set every month.
In the third quarter of 2021 alone, Indian startups managed to raise over USD $17.1 Bn. This amount is easily the highest raised in any given quarter ever since deals started to be recorded (from 2014).
To shed light on the larger picture, the amount raised in Q3 2021 is substantially higher than the annual funding of each year from 2014 to 2020. The next highest amount raised was in the year 2017 and stood at USD $13.2 Bn. Also, a whopping USD $28 Bn was raised in the first nine months of 2021.
However, this growth wasn’t foreseen. In the first six months of 2021, Indian startups had raised a significantly lower amount of USD $11 Bn over 614 deals. The unanticipated surge in investments has come on the back of a large uptick in average ticket size for funding deals, which stands at USD $43.2 Mn for the quarter, with over 465 deals recorded (the highest so far), over 55% higher than Q2 2021. Q3 saw 150 more deals than Q2 2021.
A chunk of investments and deal tally have come in after the second wave of Covid-19 subsided in June of 2021. The speedy growth has been primarily driven by mega-deals (USD $100 Mn+) in growth and late-stage startups. Till September 2021, we have witnessed 70 such mega-rounds, with 8 of these involving rounds that exceeded USD $500 Mn.
Inspecting the segments, Fintech saw the most number of deals in Q3 2021 at 79, followed by the ecommerce sector at 72 deals in the quarter, led by increased promise in the industry for investors. Surprisingly, when it comes to the amounts raised, the two segments swap places with ecommerce ending up with the lion’s share in Q3 at USD $5.2 Bn.
Such inflow of capital led to a record-breaking number of unicorns this year. Till Q3 2021, 26 Indian startups have crossed the USD $1 Bn valuation mark. This includes the first healthtech (Innovaccer), first crypto (CoinDCX) and first social commerce (Meesho) unicorns.
This year also witnessed three more edtech startup unicorns (upGrad, Eruditus, and Apna) while Apna became the swiftest unicorn, reaching USD $1 Bn valuation in merely 28 months.
What is even more shocking is that half of all startups that became unicorns this year achieved that feat in Q3 2021. Overall, India now has 68 unicorn startups which have a total valuation of USD $212 Bn and with over USD $62 Bn raised by these startups.
With the increased incidence of unicorns, the next prospective achievement for the Indian startup ecosystem is for these startups to become Decacorns. Decacorns are those startups which manage to cross USD $10 Bn in valuation.
Byju’s is currently the highest valued Indian startup at USD $16.5 Bn. Other Indian decacorns include fintech giant Paytm (USD $16 Bn) and Walmart-owned Flipkart (USD $25 Bn).
The next decacorn can be anticipated from the group of late-stage companies like OYO, Ola and Swiggy. Swiggy is reported to be in talks with investors to raise enough funds to cross the USD $10 Bn valuation threshold.
In the past few months, we have seen the public offerings of Zomato, CarTrade, EaseMyTrip among others, arousing interest in investors and skyrocketing the hype around IPOs in India. While Paytm is planning India’s largest public market debut with its USD $3 Bn IPO (at a valuation of USD $30 Bn), OYO is looking to raise USD $1 Bn from the public markets.
Additionally, omnichannel beauty retailer Nykaa, fintech startups Mobikwik and PolicyBazaar, logistics unicorn Delhivery are also looking at going public in late 2021 or early 2022. Despite the presence of risks, market analysts and experts are bullish on the IPO potential of tech-startups and new-age companies.
Latest Funding News