After hitting record high, startup funding in India falls to $4.6b in August

After hitting a 19-month high in July, fundraising by Indian startups fell to $4.6 billion in August across 153 venture capital (VC) and private equity (PE) transactions, according to proprietary data compiled by DealStreetAsia.

Led by several big-ticket deals, Indian startups had garnered a record $11 billion through 180 transactions in July. Startup investments in August, however, witnessed a jump of about 20% from $3.83 billion in June. Last August, the total funding stood at $646 million across 84 transactions.

Of the total transactions last month, the value of as many as 21 deals was undisclosed, the data showed.

There were about 13 mega deals ($100 million and above) in the month, which accounted for about 74% of the total deal value. These included education platforms Eruditus, upGrad, and Unacademy, VerSe Innovation, the parent company of short video platform Josh and digital media platform DailyHunt, digital payments platforms BharatPe and PhonePe, SaaS startup Postman, tech-enabled B2B platform OfBusiness, B2B manufacturing platform Zetwerk, among others.

In the month’s biggest deal, executive education platform Eruditus raised $650 million as part of its latest Series E round led by Accel US and SoftBank Vision Fund II. The funding involved a secondary component of $220 million from investors including Canada Pension Plan Investment Board and Prosus Ventures.

In another major deal, VerSe Innovations raised over $450 million in a series I round of funding from investors Siguler Guff, Baillie Gifford, affiliates of Carlyle Asia Partners Growth II and others.

August also saw at least seven startups enter the unicorn club, including Eruditus, uopGrad, BharatPe, cryptocurrency exchange CoinDCX, B2B marketplace for manufacturing items Zetwerk, sales enablement platform MindTickle, and OfBusiness. Unicorn is a moniker used for privately held companies that are valued at $1 billion and above.

Financial services & education lead the pack

The financial services sector is prominent on investors’ radar as more consumers switch to digital modes of payment. Startups within financial services, led by fintech, outperformed those in the other sectors by mopping up $1.32 billion through 27 deals.

Some of the top deals within the industry were clinched by BharatPe, PhonePe, OfBusiness, digital book-keeping app Khatabook, cryptocurrency exchange CoinDCX, and neobank Jupiter.

According to the estimates, the Indian fintech market was valued at around Rs 1,92,016 crore in 2019 which is projected to reach Rs 6,20,741 crore by 2025 at a CAGR of 22.7 per cent.

India’s edtech sector, too, has seen unprecedented growth since the lockdown in March last year. There are more than 4,500 startups operating in the edtech space in India currently. The industry is poised to become $30 billion in size in the next 10 years from the current market size of around $800 million, according to a recent report by RBSA Advisors.

Edtech startup Eruditus is the fourth edtech startup to have entered the coveted unicorn club after attaining a valuation of $3.2 .billion in its latest round. UpGrad entered India’s unicorn stable after completing its $185 million fundraise, led by Temasek Holdings Ltd at a valuation of $1.2 billion. The other two unicorns in the edtech space include Naspers and Tiger Global-funded Byju’s and SoftBank-backed Unacademy.

Software was the third most funded industry in July that garnered a total of $518 million in its kitty. Together financial services, education/training, and software industries accounted for about 70% of the total deal value in August.

Early-stage deals drive volumes

Deal volumes were led by early-stage deals in August.

The majority of venture deals during the month were in the pre-seed and seed stages, with these startups raising about $91.7 million across 51 transactions. This is almost at par with pre-seed and seed-stage deals in July that mopped up capital worth $92.6 million across 55 transactions.

Startups in pre-Series A and Series A stages raked in about $395.5 million across 50 transactions, which is a drop of about 6.5% from July and a growth of 44% over June.

In terms of value, growth-stage startups led fundraising in August. Companies in the Series B or post-Series B rounds collected an aggregate of $3.3 billion through 29 investments. This comes to about 72% of the total deal value in the month.

Top investors

Sequoia Capital India, along with its startup accelerator Surge, topped the investors’ list in August with at least 10 investments compared to 16 in July. In the month, it led investments in Apnaklub, a B2B wholesale platform for fast-moving consumer goods (FMCG), neobank Jupiter, pet care company Heads Up For Tails, and apps development company AppsForBharat.

Venture Catalysts, along with its early-stage startup fund 9Unicorns, occupied the second spot with at least nine investments in startups including online fashion marketplace CoutLoot, healthtech platform NeoDocs, OTO Capital, which provides financing option for two-wheeler buyers, revenue-based financing platform Klub, and AI video bot platform Expertrons.

Accel and Better Capital made at least eight investments each while Elevation Capital made about seven investments.

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.