Funding for Indian startups down 29% in first half of 2020: Tracxn

Startup funding dropped by 29% in the first six months of 2020 to $4.2 billlion compared to $5.9 billion in the corresponding period last year, due to the impact of the coronavirus pandemic, according to data by venture capital industry tracker Tracxn.

Only 443 startups were funded in the January-June period this year against 725 in H1, 2019. This year also put the spotlight on certain sectors like alternative lending, payments and test preparation tech and generated a lot of interest and funding from investors, according to Tracxn.

While funding in the startup ecosystem was impacted by the covid-19 crisis and the overall economic uncertainty, the restrictions put on direct investments by Chinese investors into Indian companies may put an immediate freeze on funding, impacting small and large internet firms alike.

Even as the economic situation worsened, some startups however managed to raise significant funding this year.

Test preparation tech startups saw the biggest jump in funding with 821 firms raising $666.2 million, up 538%. Ed-tech startup Byju’s raised about $100 million from Mary Meeker’s technology fund Bond, taking the valuation of the start-up to $10.5 billion. It had earlier in the year raised $200 million from Tiger Global. The new funding makes Byju’s the second most valued startup in India.

Startups like Sachin Bansal’s Navi, Lendingkart and InCred dominated the alternative lending segment that saw a total funding of $704.5 million, up 67%.

In the Mom & Baby Care segment, 531 start-ups managed to raise $327 Mn, up by 3031%. In 2019, there were no start-ups in this segment that raised funding.

In the payments segment, 989 companies, including Paytm, Pine Labs and Billdesk Overall, raised $347.7 million, down 37% from the first half of 2019.

Three startups – FirstCry, Nykaa and Pine Labs- entered the unicorn club this year compared to six last year. Unicorns are startups with a valuation of 1 billion and above.

Sequoia Capital and Accel were the top venture capital firms, while Steadview Capital and FMO were the top private equity firms in H1’20.

VC investors have been warning startups to control costs and avoid expansion in a bid to boost profitability.

On Tuesday, Sequoia India said it has received commitments worth $1.35 billion from limited partners for two new India- and South-East Asia (SEA)-focussed funds—a $525-million venture fund, and a $825-million growth fund.

“We are excited about the depth of opportunities in this region, which is undergoing a massive technology-led transformation. The startup ecosystem in both India and SEA has come a very long way in the last few years; the market gets deeper and the crop of founders, and their achievements, becomes more impressive each year,” said Shailendra J. Singh, managing director, Sequoia Capital (India) and SEA, in a blog post.

The 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.