India Deal Review: E-commerce, logistics push startup fundraising to $1b in December

Photo: Reuters

All’s well that ends well. At least, risk capital investors in India would agree on that as they had reasons enough to cheer as 2020 drew a close.

In terms of venture capital and private equity activity, startups raised at least $1 billion across 85 transactions in the month of December, according to proprietary data compiled by DealStreetAsia.

Although this highlights a drop of 23% when compared to November, the high point is that the country produced three unicorns (startups valued at $1 billion and above) during the last month of 2020, a year that was otherwise laced with uncertainty due to the COVID-19 crisis.

While two unicorns – Glance and Dailyhunt – emerged from the social media and content space in the burgeoning startup ecosystem, Zenoti too made it to the coveted list from the software sector. Unicorns refer to startups valued at $1 billion and above.

Startups garnered about $1.3 billion across 105 transactions in November, while in the month of October, the amount raised by them stood at $722 million across 84 transactions. In December, the transaction value of as many as 19 transactions was not disclosed.

Last month, Glance, the owner of the fast-growing video-sharing social media platform Roposo, pulled $145 million led by search giant Google with participation from existing investor Mithril Capital, while Bangalore-based VerSe Innovation, the parent company of news aggregator platform Dailyhunt, received more than $100 million from Google, Microsoft and Falcon Edge’s Alpha Wave Incubation.

Google’s investment is significant as the company in July had announced its plans to invest $10 billion in India over the next 5-7 years via its digitisation fund to accelerate the country’s digital economy.

Of the $10 billion corpus, Google is already investing $4.5 billion into Reliance Industries-owned Jio Platforms for a 7.7% stake in the company. Google is reportedly also in talks to invest in another Indian content startup ShareChat, which owns short-video app Moj, a TikTok like platform.

Logistics gain from COVID-19

Logistics and distribution industry-led fundraising in December thereby garnering $303 million across seven transactions. Logistics had taken a backseat with the imposition of lockdown in March, but with e-commerce and consumer services gaining steam, technology-enabled logistics players aggressively boosted their services to ensure timely delivery of medicines, grocery and other essential items as people stayed indoors.

Going forward, startups operating in this sector are expected to get further mileage as more rural consumers get online and change their purchasing behavior in a post-COVID world.

 

Within logistics, Ecom Express raised the largest round of $250 million from global private markets investment manager Partners Group. The amount of stake divested by the company, however, was undisclosed.

Internet startups occupied the second spot by raising $249.4 million across eight transactions with Glance and Dailyhunt attracting eyeballs. The ban on TikTok app owing to the border skirmish between Indian and Chinese troops in June opened up significant opportunities for homegrown short video apps, which wasted no time in wooing TikTok’s 200 million Indian user-base.

In terms of volume, the software industry witnessed the highest number of deals standing at 16 – the combined value of the transactions stood at $223.6 million. Zenoti, a cloud software provider to the beauty and wellness industry, raised the largest round of $160 million in Series D funding at a valuation of over $1 billion led by US-based private equity firm Advent International, with participation from existing investors Tiger Global and Steadview Partners.

Together, the three industries – logistics/distribution, Internet, and software – mopped up about $776 million, accounting for 72% of the deal value.

E-commerce bounces back

Overall, the e-commerce sector showed signs of recovery post lockdown. Startups operating in the sector collectively garnered $407.4 million across 12 deals in December. These include fundings clocked by KIKO TV, DealShare, Delhivery, Clovia, Infra.Market, and Ecom Express, among others.

According to a Morgan Stanley report, India’s e-commerce market will be worth $200 billion by 2026. As per industry body NASSCOM’s latest estimates, India’s e-commerce market was worth $33 billion in the financial year 2017. Much of the growth for the industry has been triggered by an increase in the internet and smartphone penetration.

In terms of sectoral breakups in December, social media startups together raised $249.6 million across five transactions, while SaaS startups raised around $197 million across nine transactions as companies continued to digitise and automate. Zenoti, SAWO Labs, Toppeq, Let’s Dive, Swipez, and HappyLocate were among the companies to have raised funding during the month.

Indian software as a service (SaaS) companies are poised to reach $18-20 billion in revenue and capture 7-9% share of the global SaaS market by 2022, as they build new capabilities to drive the next wave of growth, according to the latest report by Bain & Co.

Seed-stage deals gather pace

Pre-seed and seed-stage startups together raised $21.5 million across 26 deals in December as against $12.7 million across 19 transactions in November as investors continued to evince interest in new business ideas. There were about 15 pre-Series A and Series A deals that collectively raked in about $40.8 million in December.

Companies at and post-Series B round collected an aggregate of about $421 million – about 39% of the total deal value – through 13 investments. This is a sharp drop over November when growth-stage startups collected an aggregate of about $677 million through 16 investments. In general, growth-stage funding was worst hit due to the pandemic last year as investors were hesitating to make big bets.

The only disclosed private equity deal during the month was that of e-commerce logistics startup Ecom Express.

Most active investors

Startup incubator Venture Catalysts, along with its accelerator fund 9Unicorns, topped the investors’ list with at least 13 deals in November. Some of their bets in the month included calling and qualifying platform for working professionals Callify.ai, B2B digital supply chain platform AgriGator, digital payment platform Ypay, solar monitoring and analytics platform Prescinto, vernacular competitive examination preparatory platform Pariksha, health-tech platform NeoDocs, AI-powered short live video e-commerce platform KIKO TV, among others.

Sequoia Capital and its accelerator fund Surge stood second with at least nine deals. The firm was last reported to be seeking to raise about $7 billion for a set of venture funds across China, India and the US.

Other prominent venture firms including Inflections Point Ventures, LetsVenture, Alpha Wave Incubation, and Better Capital made at least three investments each.

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.