India reached a record high in venture capital fund-raising, deals and exits in 2014, but investments this year might surpass that, says a new report. Deal-making activity in 2015 has been on a steeper growth path, powered by internet-led companies that are frontrunners in terms of number of deals and value of funds raised.
The ‘Venture Capital in India’ report by Preqin Ltd., a London-based provider of data and intelligence for alternative assets, says, “The steep upward curve in activity is an indication of the country’s rapidly developing venture capital industry and thriving start-up environment.”
Internet-based companies accounted for nearly half of the aggregate deal value in venture capital fundraising in India.
Preqin considered all deals completed until August 24, 2015 for this report. There have been 10 rounds of fundraising worth $1.4 billion already in 2015, compared with 14 rounds which raised $2.2 billion last year.
Post August, three venture capital firms have announced new funds — Kalaari Capital‘s $290 million fund, Sequoia‘s announcement of a fifth India-centric fund worth $800 million, and Beenos, which launched a $60 million fund. This year is well on track to beat 2014 for a more thriving eco-system to fund startups.
Venture capital firms struck 500 investment deals this year until August, worth $4.5 billion, compared with 450 deals last year valued at $6 billion. Compare this with 2009, when there were just 110 deals worth about $500 million following the global financial slowdown.
Sequoia Capital India IV, that raised $740 million and closed in 2014, is the largest ever India-focussed venture fund since 2007. The company’s Growth Fund II, that had closed with $725 million in 2008 is next in that order, followed by SIDBI‘s $718 million Samridhi Fund that closed last year. The absence of big funds between 2009 to 2013 is largely due to a difficult economic environment worldwide, akin to the Great Depression of the 1930s, which started easing since last year as the United States’ economy recovered.
The report also measured aggregate transaction size since 2007, and according to that Nexus Venture Partners comes on top with $1.6 billion, followed by SAIF Partners at $1.1 billion and Kalaari at $843 million.
Among Indian startups that raised funding, Flipkart, India’s largest online marketplace, easily bests others having raised the top 3 VC rounds since 2007. In July last year, the Bangalore-based company raised $1 billion, and followed up with another massive round worth $700 million in December. And it raised a further $700 million in 2015. One97, owner of online payments processor Paytm, came close this year with $635 million, largely due to a big investment by Ant Financial, Alibaba Group Holdings’ financial arm.
Not surprisingly, companies in the internet space — including e-commerce, online payments and taxi-hailing apps — got 49 per cent of the total funding by venture capital firms, more than several other sectors put together. Next in line is the business services sector which got 11 percent of the aggregate deal value.
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