Indian start ups notch record US$36 bn in funds in 2021: Report

Preqin, a UK based investment data platform estimates that private and venture investments have tripled in amount as compared to US$11 billion in 2020.

January 21, 2022

Seed-stage deals stand at US$706.86 million in FY21.

166 series A investments amount to US$1.67 billion.

FY21 witnessed unicorn startups valuing at US$1 billion.

Zomato’s IPO of Rs.9000 crore set the stage for other startups filing for IPOs in India.

The start-up ecosystem in India has bagged a record investment of US$36 billion in private companies this financial year despite the Covid-19 pandemic, thanks to an acceleration in digitization . Preqin, a UK based investment data platform estimates that private and venture investments in India have tripled in amount as compared to US$11 billion in 2020. 

In the current year, seed-stage deals stand at US$706.86 million, while 166 series A investments amount to US$1.67 billion, as of December 20, 2021. Pre-IPO financing rounds of Zomato, Ola, Policybazaar and Paytm were heavily funded with top 10 deals recording upto US$5.58 billion, as per Preqin data. 

With an increase in the deals, the Indian market also saw an uptake in financing rounds as compared to previous years risk capital funds that led investors take bigger bets on higher growth companies during an early stage.because of which, companies have been able to triple their valuation along with successful financing rounds. 

Commerce and Finance Minister, Mr. Piyush Goyal ascribed higher capital flow into high-growth companies to a confluence of factors including higher global liquidity and the relative attractiveness of startup investments compared to other asset classes. Global funds such as  Tiger Global, Falcon Edge, Sequoia Capital, Accel, Blume Ventures were among the most active investors this year. Known for its large-sized bets, SoftBank also invested more than US$3 billion in the upcoming Indian startups, making it the largest infusion in Indian startups by the Japanese investment firm in India in a single year.

Plethora of Unicorns:

This year a number of startups became Unicorns or with a valuation over US$1 billion or more. Forty companies were added to the coveted unicorn club, with the first week of April witnessing at least 6 unicorn additions. Along with unicorns, other high-growth startups raised multiple rounds this year. 

Companies like Cred, OfBusiness, Groww, Cars24, Licious, Spinny, Infra.Market, Good Glamm Group and Prisytn Care grew considerably last year. Unicorn founders are of the view that in late-stage funding deals, there are relatively fewer assets and therefore marquee investors are ready to sweeten the deal. 

Backed up with heavy funding from Investors, startups have been able to execute better strategies and grow threefold through inorganic routes, both vertically and geographically. 

Investors also think that heavily dominated categories in 2021, like web3.0, Crypto, SAAS, D2C brands, Fintech, B2B companies, EdTech, Healthcare will continue to attract funding in the upcoming year as well. 

The year of Tech-IPOs:

2021 saw a number of Initial Public Offerings (IPOs)as technology-led businesses were able to tap public markets. 

Small gaming startups like Nazara Technologies also went public this year. Zomato’s IPO of a whopping Rs.9000 crore set the stage for other startups filing for IPOs in India. Zomato also made other founders in the industry rethink their IPO timelines and consider it as a serious option for 2022 and 2023. 

Other startups such as Policybazaar, Nykaa, Paytm raised US$2.5 billion from public market investors. Investors expect the momentum to spill over into the new year as well with more and more startups going public.