India: Edtech startups witness massive jump in VC deals in H1 2020

Photographer: Xaume Olleros/Bloomberg

In the first six months of 2020, venture capital firms (VCs) have shown a clear preference for ed-tech startups with $795 million raised compared to $108 million in the year ago period.

While the number of deals hasn’t increased drastically, it is the only sector apart from healthcare to report a growth in number of deals according to data from Venture Intelligence research. Other sectors largely raised funding before the full impact of the pandemic started began to play out April while ecommerce reported a 70% dip in deal sizes and half the number of deals compared to the same period last year.

As of H1 2020 (data till 26 June), there have been 272 deals raising $4.1 billion across sectors compared to 393 deals worth $4.6 billion during H1 2019. H2 2019 reported a much better performance at 356 deals worth $5.4 billion. In H1 2020, most sectors raised funding before the full impact of the pandemic started in April.

In response to schools being shut due to the covid-19 crisis and lockdowns, ed-tech platforms have stepped in to fill the gap in live classes to further student engagement showing some prospects to investors as well. Mint reported on Thursday that Byju’s is set to hire around 4,000 employees in the next six months as demand for its online courses skyrocketed since the lockdown in March. However, experts suggest that there is scope for startups that can help schools and colleges go online in this situation as well.

Vivek Soni, partner and national leader, private equity services at EY, said there continues to be significant uncertainty in the ecosystem over the spread of the disease and consequently the government policy response, both at a central and state government level. As a result, enterprises can find themselves dealing with many different markets at different stages of lockdown and recovery.

“During such uncertain times, startups with differentiated business models are more likely to attract VC funding. Moreover, with increased scrutiny on unit economics, VC investors will be more cautious. Strong existing investors on the cap table and founders that have previously exhibited their execution skills will also find favour as differentiating factors,” said Soni.

Anil Joshi, Partner – Unicorn India Venture said, “Looking ahead, startups with differentiated models will find funding because VCs also look for good opportunities during these times. Early stage funding should be normal, mid-stage fund raising is likely to be difficult, more so if they were previously bootstrapped, but again growth stage startups will raise money even if it may be lower than planned.”

This article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.