India Deal Review: Startup funding falls 57% to $1.8b in May amid second COVID-19 wave

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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.

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.