India Deal Review: Startups mop up $3.8b from 152 PE-VC deals in June despite COVID

Photo: Pixabay

Even as the deadly second wave of COVID-19 raged on in India, the country’s startups raised a whopping $3.83 billion in venture capital and private equity funding in June, show proprietary data compiled by DealStreetAsia.

This is more than double the amount raised in May when startups mopped up about $1.83 billion across 93 transactions. It is also an 820% leap from the $416 million raised from 53 PE-VC deals in June 2020.

June also saw the maximum number of transactions in the last six quarters at 152, a sign of growing investor confidence in the Indian startup ecosystem.

Also, at least nine companies raised a $100-million plus round in the month. This includes Vini Cosmetics, Byju’s, Urban Company, Eightfold AI, BrowserStack, Outreach, Star Health and Allied Insurance Co. Ltd, Vianai Systems, and Fourth Partner Energy. In May, six companies had raised $100-million plus rounds.

So far this year, April was the best month in terms of funding when the country saw the entry of eight companies into the unicorn club, and a total of $4.23 billion was poured into startups across 99 deals.

It was towards April-end that many states decided to impose lockdowns to contain the spread of the coronavirus. The lockdowns prompted some businesses to scale down or temporarily shut operations. But many kept the show going and raised larger rounds to bolster their balance sheets and prepare for a possible third wave of the pandemic.

Software startups in demand

When broken down by industry, software startups topped fundraising in June — both by deal value and deal volume — by mopping up $1.15 billion across 25 transactions. The demand for software startups has been on the rise since the pandemic has made work from home the new normal.

Among software fundraisers, talent management platform Eightfold AI raised the largest round of $220 million led by SoftBank’s Vision Fund II, boosting its valuation to around $2 billion. Another software startup BrowserStack raised $200 million at a valuation of $4 billion. The Series B round was led by BOND, with participation from Insight Partners and existing investor Accel.

Startups offering consumer products raised about $740 million through 17 transactions in the month, as people migrated online to order essentials amid the pandemic.

Education technology startups, too, have remained the apple of investors’ eyes since the onset of the pandemic, due to the closure of schools and universities. These startups raised a total of about $506 million across 16 transactions in June. The month saw edtech major Byju’s surpass Paytm to become the most valuable Indian startup after raising about $340 million at a valuation of $16.5 billion.

The top five industries in the month — software, consumer products, education/training, consumer services, insurance — mopped up $2.9 billion, or almost 76% of the total funding.

Within verticals, beauty & hygiene led funding by scoring $694 million across six transactions led by the Vini Cosmetics deal. Last month, global private equity fund KKR announced that it is investing $625 million for a controlling stake in Vini Cosmetics. Sequoia Capital is selling its shares in Vini as part of the deal.

Meanwhile, startups in the -commerce vertical garnered $534 million from 26 transactions.

Seed-stage deals catch investors’ fancy

Pre-seed and seed-stage deal funding more than trebled to $78.2 million in June from $22 million in May. The number of deals, too, increased to 39 from 33 in May. 10club, an e-commerce marketplace aggregator raised $40 million in one of the largest seed funding rounds in the country in June. The financing was co-led by Fireside Ventures and an undisclosed international investor.

Other startups to have raised seed rounds during the month include game streaming platform Loco, healthtech startup Good Health Clinic, B2B SaaS startup Rocketlane, fintech startup Bueno Finance, and Crejo.Fun, a digital extracurricular platform.

In terms of value, growth-stage startups led June’s fundraising. Companies in the Series B or post-Series B rounds collected an aggregate of $2.3 billion — about 60% of the total deal value — through 28 investments.

As many as 41 pre-Series A and Series A funding deals, worth $275 million, were clocked in June as against $214 million in May. There were about six private equity deals that raised a total of $979 million in the month.

Most active investors

Venture Catalysts, along with its fund 9Unicorns, was the top investor in June with at least 13 venture capital transactions. Their investments in the month included health supplement brand Power Gummies, personal care brand The Switch Fix, beauty & wellness brand Auric, and the kids’ digital pocket money app Junio, among others.

Sequoia Capital India occupied the second spot with at least 11 investments. Sequoia, an early investor in global technology behemoths like Google and Apple, last month submitted three new filings with the US Securities and Exchange Commission (SEC), indicating its progress in raising over $5.1 billion across three growth funds.

The biggest of the three is Sequoia Capital China Growth Fund VI, which has attracted total capital commitments of nearly $2.8 billion. The other two funds — Sequoia Capital US Growth Fund IX and Sequoia Capital India Growth Fund III have collected over $1.5 billion and $824.5 million, respectively.

This year, too, Tiger Global has been aggressively investing in Indian startups. The New York-based firm made at least eight investments in June in social networking app Kutumb, online car servicing platform GoMechanic, edtech company Classplus, and student engagement platform Quizizz, among others.

Other prominent investors in the month included Better Capital with six investments, and Accel and Titan Capital with five 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.