India Deal Review: Startups raise over $1.5b in Feb even as early-stage funding drops

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Even as the COVID-19 outbreak has made investors jittery globally, they continue to be bullish about the Indian startup ecosystem. Indian startups garnered at least $1.5 billion in venture capital funding across 75 deals in February 2020, according to proprietary data compiled by DealStreetAsia.

Of the 75 reported deals, the value of as many as 12 transactions was not reported.

However, it will be a wait-and-watch scenario in the coming months with a spike in coronavirus cases globally and in India. So far till February, the country had remained relatively unscathed from the virus outbreak, which originated in Wuhan, China on December 31, 2019.

The total funding raised in February is about 3.3 per more than the $1.45-billion corpus raised through 78 venture capital investments in January, amid projections that the country’s GDP growth is expected to hit 11-year low at 5 per cent in FY20.

The month also marked Japanese conglomerate SoftBank’s first known investment of 2020 into an Indian startup. The investor pumped in about $300 million in Series E funding round of baby and mother care products retailer FirstCry, making it largest deal of the month. SoftBank has already deployed $10 billion across Indian startups, including OYO, Grofers, Lenskart, Delhivery, FirstCry, Ola, PayTM, and PolicyBazaar.

While the financial services sector, comprising fintech and insurtech, continued to lead with 15 deals during the month, edtech took over fintech by garnering maximum funding across 10 deals in the month.

The largest round, among the edtech companies, was raised by Byju’s from New York-based private equity fund General Atlantic. While General Atlantic did not disclose the deal value, it was reported to be around $200 million. In January, Byju’s had also raised a similar amount from Tiger Global at a valuation of over $8 billion.

Another eye-grabbing deal in the edtech space was Bengaluru-based Unacademy, which raised $110 million in Series E funding, led by social media giant Facebook and General Atlantic. Sequoia India, Nexus Venture Partners, Steadview Capital, Blume Ventures, Kalyan Krishnamurthy, and Sujeet Kumar were, too, a part of the financing.

Edtech, E-Commerce startups lead the pack

Investors continue to plough money into Indian edtech startups. Apart from Byju’s, Unacademy, and Vedantu, other edtech startups to have garnered funding during the month include Embibe, Coding Ninjas, Classplus, Genius Corner, and Avalon Meta.

India saw 34 venture capital deals worth $399 million in the edtech space in 2019, according to Venture Intelligence. The number is expected to go up further this year.

After edtech, e-commerce continues to be a favored investment for venture capitalists. Across seven transactions, e-commerce startups raised as much as $353 million, followed by $270.51 million by financial services startups across 14 transactions.

While a lot of capital continues to flow into the fintech sector, the competition is expected to get intense with more and more players entering the space.

Within fintech, the largest funding round of $75 million was raised by digital payments platform BharatPe, as it looks to gain a strong foothold in the lending space. The Series C financing was led by New York-based hedge fund Coatue Management and Palo Alto-based fintech investor Ribbit Capital. New investor Amplo, a US-based venture capital firm, and existing investors Insight Partners and Steadview Capital also participated.

Despite several ups and downs, investors continue to make selective bets into foodtech startups. The sector received a total of $141.73 million in funding across five transactions. Online food delivery platform Swiggy raised the largest round of $113 million at a post-money valuation of $3.4 billion.

Swiggy is currently locked in a battle for market share with Zomato and a bunch of smaller, rapidly growing cloud kitchens businesses such as Box8 and Rebel Foods. Amazon has also started testing food delivery in Bengaluru, which is going to further intensify the competition in the foodtech space.

Seed & Series A round funding drops

There was a sharp drop in seed-stage deals value and volume in February when only $13.3 million was raised through nine transactions. In January, however, see-stage startups recorded total funding of over $34 million across 30 transactions.

The biggest seed round was at $8 million raised by payments company DotPe Pvt Ltd, led by PayU and Chinese conglomerate Fosun International.

The startups together raised about $61 million through 20 pre-Series A and Series A funding rounds as against $71.25 million across 15 transactions in January.

In terms of value, growth-stage startups continue to remain the most attractive. Companies at and post-Series B round (also comprising strategic and private equity investments) collected an aggregate of about $1.3 billion  – nearly 87 per cent of the total deal value – through 26 investments.

Most active startup investors

Sequoia Capital India remained the most active VC firm, backing at least 6 startups in February as against 7 in January. It led funding for five of these startups including, an online marketplace for end-to-end construction Brick & Bolt, edtech startup Classplus, SaaS-based startup Whatfix, video editing startup InVideo, and healthtech startup Qure.ai. It also took part in edtech startup Unacademy’s $110-million funding round.

Expand Table

Investment CompanyDeal VolumeTotal Value of Particpaited Deals (USD)
Sequoia Capital6164.5 million
InfoEdge421.9 million
Steadview Capital3225 million
Accel332.5 million
General Atlantic2310 million
Nexus Venture Partners2119.9 million
Blume Ventures2112.5 million
Tiger Global291.5 million
Eight Roads Ventures257 million
Matrix Partners India244.1 million
Alteria Capital215.9 million
SoftBank 1300 million

The second slot was occupied by Info Edge with four deals, followed by Steadview Capital and Accel.  and Sprout Venture Partners with at least three investments each.

The biggest single investment was made by SoftBank into FirstCry, followed by a $200 million equity infusion by global private equity firm General Atlantic into edtech unicorn Byju’s.

VC deals worth $50m and 0ver

At least four companies garnered over $100 million funding in February while eight companies made it to the $50 million-plus club as against 10 in January, the data shows.

The four companies to have raised over $100 million in January include FirstCry, Byju’s, Unacademy and Swiggy.

Expand Table

StartupHeadquarterInvestment Size (USD)Investment StageLead Investor(s)Other Investor(s)Sector
FirstCryPune300 millionSeries ESoftBank-Retail/E-Commerce
Byju'sBengaluru200 million (reported)PEGeneral Atlantic-EdTech
SwiggyBengaluru113 millionSeries INaspersHadley Harbour Master Investments, MeituanFoodTech
UnacademyBengaluru110 millionSeries EFacebook, General AtlanticSequoia India, Nexus Venture Partners, Steadview Capital, Blume Ventures, Kalyan Krishnamurthy, Sujeet KumarEdTech
BharatPe New Delhi75 millionSeries CCoatue Management, Ribbit CapitalAmplo, Insight Partners, Steadview Capital FinTech
Innovaccer Inc.Noida, San-Francisco70 million Series CSteadview Capital, Tiger GlobalDragoneer, Westbridge Capital, Mubadala, Microsoft’s M12HealthTech
PhonePeBengaluru60 million-PhonePe Private Limited-FinTech
Rupeek FintechBengaluru60 millionSeries CGGV CapitalTanglin Venture Partners, BTB Ventures, KB Investment Co.Financial Services

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.