Fundraising by Indian startups fell by a sharp 56.7% in May as the country grappled with the deadly second wave of COVID-19 and several states were forced to impose lockdowns.
Startups raised $1.83 billion in the month from 93 venture capital and private equity transactions, according to proprietary data compiled by DealStreetAsia.
This is less than half the amount raised in April, which was a bumper month for the Indian startup ecosystem. In April, 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 — an over 75% increase from March’s $2.4 billion.
In May, there were about six deals where the funding size crossed $100 million. Merchant commerce platform Pine Labs scored the highest amount of $285 million in a primary and secondary equity sale from public market investors including Baron Capital Group, Duro Capital, Marshall Wace, Moore Strategic Ventures, and Ward Ferry Management. Existing investors Temasek, Lone Pine Capital, and Sunley House Capital also participated in the round.
Other megadeals that were closed during the month included fundraisings by logistics technology startup Delhivery ($277 million), consumer services platform Urban Company ($255 million), banking tech startup Zeta ($250 million), B2B commerce platform Moglix ($120 million), and SaaS-based logistics startup FarEye ($100 million).
Financial services rake in the most money
In terms of deal value and volume, startups within the financial services industry took the lead with $657 million raised across 18 transactions. Within financial services, fintech has particularly been the darling of investors since the onset of the pandemic early last year, which gave a major push to digitalisation in India.
As people remained indoors due to COVID-induced lockdowns, there was a spike in e-commerce. The vertical accounted for about 46% of the total deal value in May. The spike in demand for e-commerce, in turn, increased demand for logistics and distribution, which garnered $377 million across three transactions in the month, led by Delhivery and FarEye.
Meanwhile, the consumer services industry recorded only one deal worth $255 million, while SaaS startups garnered $136 million across five deals.
The top five sectors in the month — financial services, logistics/distribution, consumer services, retail, and consumer products — mopped up $1.6 billion, or almost 88% of the total funding.
Growth-stage deals dominate
In terms of value, growth-stage startups led May’s fundraising. Companies in the Series B or post-Series B rounds collected an aggregate of $1.2 billion — about 65% of the total deal value — through 12 investments.
Pre-seed and seed-stage deal funding rose marginally to $22 million in May from $20.5 million in April. Pre-seed and seed-stage funding stood at $44.4 million in March and $29.4 million in February. The number of deals in May, however, surpassed all the previous months at 33.
Corporate card startup Kodo, services automation and remote management startup SuperOps.ai, women’s activewear brand BlissClub, and fintech startup Nivesh were among the startups to have raised seed funding in the month.
As many as 33 pre-Series A and Series A funding deals, worth $214 million, were clocked in May as against $48.7 million in April.
Most active investors
Indian Angel Network (IAN) was the top investor in May with at least five investments including in fintech startup Nivesh, insurance technology startup Artivatic.ai, edtech startup Ingenium, career discovery platform Mentoria, and mobility and smart parking startup Get My Parking.
LetsVenture, Tiger Global, and Sequoia Capital made at least four investments each. This year, too, Tiger Global has been aggressively investing in Indian startups. The investment firm has helped make at least eight unicorns in the country so far this year including Moglix, Urban Company, Chargebee, Gupshup, ShareChat, Groww, Infra.Market, and Innovaccer.
Other prominent investors in the month included ah! Ventures , Elevation Capital, Accel, Venture Catalysts and its fund 9Unicorns, Titan Capital, and Better Capital that made at least three investments each.