India’s startup ecosystem has seen a record investment of nearly $42 billion in privately held companies in 2021 as the demand for digitization has multiplied amid the COVID-19 pandemic. UK-based investment data platform Prequin estimates that venture and private equity investments have tripled during the year, exceeding the $12 billion raised by Indian startups in 2020.
In 2021, seed-stage deal volumes dominated to $705.86 million with about 396 deals, while Series A investments totaled about $1.67 billion, with about 166 deals, as shown on December 20.
However, according to Prequin data shared exclusively with ET, most of the investment was directed towards pre-IPO financing rounds in companies such as Zomato, Ola, Policybazaar and Paytm, with the top 10 deals totaling $5.58 billion.
In addition to increasing the number of deals, Indian startups also raised larger financing rounds than in previous years as venture capital funds moved to place increasingly bigger bets on high-growth companies.
Funds such as Tiger Global, Falcon Edge, Sequoia Capital, Accel, Bloom Ventures were among the most active investors last year. SoftBank, known for its large stakes, invested more than $3 billion, making it the largest investment in an Indian startup by a Japanese investment firm in India in a single year.
Unicorns, a nickname for startups worth $1 billion or more, spawned dozens this year. About 40 companies launched themselves into the Unicorn Club, within a week in April that half a dozen startups entered the Unicorn Club over a period of four days.
Fintech startups Cred, OffBusiness, Grow, Cars24, Lycius, Spiny, Infra.Market, Good Glam Group and Pristine Care are among the firms whose valuations have grown manifold in the past one year.
Most investors said Web3/crypto, SaaS, direct-to-consumer or D2C brands in 2021 and sectors such as fintech, business-to-business (B2B) commerce, edtech and healthcare will continue to attract funding next year as well.
India’s first tech IPO
The year also saw the first Indian startup IPO. This year has seen a significant change in how technology-based businesses are able to tap public markets and most of them are being rewarded by public investors as well.
Smaller startups like Nazra Technologies went public earlier in the year, but the Rs 9,000-crore IPO of food delivery firm Zomato in June set the stage for PolicyBazaar, Nykaa and Paytm, which raised nearly $2.5 billion from public market investors.
According to data compiled by #Fintrackr, total investments that flowed into Indian startups stood close to $38 Bn in 2021. This is over three times more than the $11.1 Bn in total funding that startups received during 2020.
— Shashank Pathak (@shashank_ent) January 7, 2022