Venture capital (VC) investors, private equity (PE) players, corporates, accelerators, angel investors, etc., together put over $11.4 billion in startups this year (second highest annual deal value in the decade), down from $14.5 billion in 2019.
The fund backs digital-first consumer brands across food and beverages, beauty & personal care, lifestyle, and home products segments.
Covid has seemingly managed to put a slight dent on investments in Indian startups in 2020 as investors poured 21.3 per cent less risk capital in the outgoing year from 2019. Venture capital (VC) investors, private equity (PE) players, corporates, accelerators, angel investors, and others together put over $11.4 billion this year (second highest annual deal value in the decade), down from $14.5 billion in 2019, according to the data shared by Tracxn. However, the fall in annual deal volume or the number of rounds was less severe as startups participated in 1,152 funding rounds in 2020 vis-à-vis 1,185 in 2019. The investments in 2020 were led by $800 million raised by Byju’s followed by $700 million secured by Walmart’s PhonePe, and $660 million invested in Zomato across multiple rounds.
While the investor community had adopted a wait-and-watch stance towards making new investments in startups, many were also focused on ensuring their portfolio companies narrow down expenses to focus on core business as Covid-related burn was factored in. However, despite Covid and the following unlock phases, investors overcame the barrier of closing deals physically and switched to virtual discussions as the latter became the new normal. Investors such as Sequoia even introduced a programme to support startups and share and learn from the experiences of other successful entrepreneurs. Another fund Chiratae Ventures launched the new edition of their Innovator’s Program to support early-stage startups while IvyCap Ventures launched the third edition of Futurance programme.
In fact, Covid enabled B2C segments such as edtech, grocery, healthcare, and foodtech gradually to multiply their reach during the lockdown. According to Tracxn, edtech bagged $1.7 billion – maximum funding during 2020 while the food delivery sector received $1.4 billion. Digital wallets segment with players including PhonePe, MobiKwik, real money gaming platforms such as MPL, WinZO, online restaurants such as Biryani By Kilo, Box8, and e-commerce logistics firms such as XpressBees, Vinculum Solutions were other leading markets that caught investor attention.
Among top VCs were Sequoia with over 40 investments, Accel with nearly 30 investments, followed by Inflection Point Ventures, Matrix Partners India, and Blume Ventures while PE investments were dominated by Mayfield with seven investments, six investments each by WestBridge and General Atlantic, and five each by DST Global and Faering Capital. Tencent with 11 investments, Vistra ITCL (6), Amazon (4), Info Edge (4), and Google (3) were top corporates backing Indian startups in 2020.
In terms of top startup hubs during the 2018-20 period, Bengaluru remained on top with a 45 per cent share of funding raised by startups. Delhi NCR (including Noida and Gurugram) had a share of 37 per cent while Mumbai managed with only 11 per cent. 2020 saw 12 new unicorns, taking the total tally to 42, according to the report. FirstCry, Cars24, Pine Labs, Unacademy, Zenoti, DailyHunt, Nxtra Data, Postman, Razorpay, Glance, Nykaa, and Zerodha were companies entering the hallowed $1 billion private market valuation club.