The last (Q3) quarter of 2019 saw the biggest quarterly come back of the venture financing in Indian startups since Q3 2017.
The last (Q3) quarter of 2019 saw the biggest quarterly come back of the venture financing in Indian startups since Q3 2017. The mega come back was seen in the total deal value at around $3.5 billion vis-a-vis a little over $5 billion back in the third quarter of 2017, according to a report by KPMG. The deal value since then had declined to the lowest level of around $1.1 billion in Q2 2018. Q2 2019 saw the value climbing to around $2.1 billion. The last quarter’s rise was backed by large ticket deals including $490 raised by Ola, $373 million secured by Udaan etc.
“VC investment activity, in general, has been robust,” Nitish Poddar, Partner and National Leader, Private Equity, KPMG India said in the report. While acknowledging ‘some’ credit squeeze in the economy, Poddar said “the underlying sector performance” led by strong consumption-based growth in sectors including fintech, logistics, edtech, and mobility, “suggests a very strong pipeline.”
In terms of the deal volume or the number of deals, there has only been an incremental increase from a little over 100 deals in Q2 2019 to around 130 deals in Q3. Looking at around the past 4 years, the deal volume has declined dramatically. From around 340 deals (highest since Q1 2012) in Q1 2016, the number went south to the lowest number in Q2 2019. While there was some optimism during Q1 2017 and Q2 2018 with around 275 and 230 deals respectively but the volume is yet to take off substantially.
Nonetheless, with respect to the capital invested, the report expects the momentum to stay strong in the next two quarters even as it “might not be as robust as the past two quarters. In comparison to the Q3 deal value, the same quarter of the previous year saw around $1.9 billion invested in nearly 140 deals.