India Deals Barometer Report: Indian startups kickstart 2022 with $4.43b funding in January

Making a good start into the new year, Indian startups raised over $4.43 billion in January 2022 across 199 private equity (PE) and venture capital (VC) transactions, according to proprietary data compiled by DealStreetAsia. This is more than a four-fold increase from January last year when COVID-hit startups raised mere $1 billion across 89 transactions.

However, when compared to the preceding month of December, transactions witnessed a marginal dip both in terms of volume and value last month.

In December 2021, startups raised as much as $4.86 billion across 201 transactions.

According to experts tracking the sector, the fundraising activity in the startup ecosystem is expected to continue with sectors such as fintech, SaaS, D2C, B2B, logistics and education increasingly gaining traction.

Out of the total transactions in January, the value of 26 deals was not disclosed.

India saw four startups enter the unicorn club (startups valued at $1 billion and above) in January. These include names such as social commerce startup DealShare, end-to-end enterprise HR software DarwinBox, edtech startup LEAD,  and artificial intelligence startup Fractal – all from different sectors even as technology happens to be the common thread.

In the whole of 2021, as many as 43 startups in India made it to the unicorn list while the total number of startups valued at over $1 billion so far stands at 85. Going forward, the country may add another 45 startup unicorns in the next 12-18 months, according to a report released by PGA Labs last month.

Deals worth over $100m in Jan

The country clocked at least 11 mega transactions – those amounting to over $100 million (mega deals), totaling $2.6 billion. They comprised 58% of the total deal value in January. In comparison, fundraising growth in December was fuelled by 14 mega deals that were worth $3.3 billion.

To break down the numbers further, Bengaluru-based food ordering and grocery platform Swiggy raised the largest round of $700 million in a bid to give a push to its core platform and newly launched quick grocery delivery service Instamart.

The round was led by asset manager Invesco, and also saw participation of a host of new investors such as Baron Capital Group, Sumeru Venture, IIFL AMC Late Stage Tech Fund, Kotak, Axis Growth Avenues AIF- I. Swiggy was reportedly valued at $10.7 billion in the round.

Logistics, financial services among top grossers

Fundraising by Swiggy helped push logistics and distribution industry to the top as startups within the industry raked in $1 billion across eight transactions.

Swiggy has earmarked heavy investments into Instamart amid growing competition in 10-minute grocery delivery space from the likes of Grofers (now Blinkit), BigBasket and Zepto.

Mukesh Ambani-led Reliance Retail’s $240-million investment in hyperlocal delivery startup Dunzo was another big deal in the logistics space. Post the investment, Reliance Retail has become the largest shareholder in Bengaluru-based Dunzo with 25.8% stake.

Explaining the rationale behind investing in Dunzo, Reliance Retail said in a statement that Dunzo will enable hyperlocal logistics for the retail stores operated by the company, further adding onto its omni-channel capabilities. It added that Dunzo will also facilitate last mile deliveries for JioMart’s merchant network.

Financial services, led by financial technology, was the second most funded industry with a total of $567 million in its kitty. The capital was raised across 37 transactions. Novo, a neo-bank focused on small businesses, raised the largest round of $90 million in its Series B round led by Stripes. Novo was valued at $700 million in the last round.

Other startups within financial services that secured funding in January include Refyne, M2P Fintech, DMI finance, Rupeek, Stockgro, Vyapar Rupifi, Pine Labs, CASHe, Innoviti Payment, among others.

Retail occupied the third spot with $436 million funding across 11 deals, led by Udaan’s $250-million financing round via convertible note and debt. DealShare’s $130-million financing was another big deal during the month, which saw participation from Tiger Global, Alpha Wave, and Kora Investment.

Together, the top three industries – logistics/distribution, financial services, and retail – garnered $2 billion, accounting for about 45% of the total value.

Early-stage vs growth capital

The value of pre-seed and seed deals increased 36% to $113 million in January across 71 transactions from $82.7 in December across 75 transactions. EVage, an Indian all-electric light commercial vehicle OEM, raised the largest seed round of $28 million, followed by crypto investment app Flint ($5.1 million) and The ePlane Company ($5 million).

Meanwhile, startups in pre-Series A and Series A stages mopped up $426.4 million through 51 transactions compared to $240.4 million across 45 transactions in December. Some of the large Series A rounds in January were that of social investment startup StockGro ($32 million), digital payments startup Rupifi ($25 million), game streaming and e-sports platform Rooter ($25 million), and dentalcare startup Smiles.ai ($23 million)

Growth-stage deals accounted for bulk deal value. Companies in Series B or post-Series B rounds collected an aggregate of $2.5 billion across 29 transactions in January as against $3.72 billion across 40 transactions in December.

There were about 13 debt deals worth $294.6 million, while two PE deals worth $370 million were closed in January. Corporate deals, too, picked up in the month and were worth $232.5 million.

Most active investors

Early-stage venture firm Better Capital, which is run by Silicon Valley entrepreneur Vaibhav Domkundwar, emerged as the most active investor in January with 14 investments. The firm led funding rounds for fintech startup IppoPay, crypto platform Sahicoin, creator-owned marketplace startup HYPD, AI-powered customer data and marketing platform for e-commerce and D2C brands Contlo, and OTT platform STAGE.

Last November, Better Capital raised its maiden fund of $15.2 million to invest in 40-50 sector agnostic pre-seed and seed-stage startups with a median check size being $300,000. The fund is backed by founders, operators and investors from across the world, including Meta, Google, Uber, LinkedIn, Tiger Global, TPG, The World Bank among others.

Venture Catalysts, along with its accelerator fund 9Unicorns, was the second most active investor with at least 12 deals in its kitty. They led funding rounds for cross border healthtech platform Hospals, invoice factoring startup Reevoy, vernacular storytelling platform Ekank Technologies, dietary supplement brand Power Gummies, and pitching startup Easy to Pitch.

Sequoia Capital India, along with its startup accelerator programme Surge, made 10 investments while Blume Ventures made seven investments. Meanwhile, Tiger Global, Alpha Wave Incubation (AWI), and Inflection Point Ventures made six investments each.