Comments
While investments into Indian start-ups by private equity and venture capital funds have hit an all-time high, the ticket size of the deals has also gone up significantly in the first eight months of 2021.
As on August 19, there have been 37 deals in the $100-250 million range, and 14 deals in the $250-500 million range compared with only 31 and 4 deals, respectively, in the same categories the entire 2020.
In addition to traditional private equity funds, inflow was seen from family offices, HNIs and corporates.
Additionally, the crackdown on the start-up ecosystem in China has made Indian start-ups more attractive for foreign investors.
According to data accessed by BusinessLine from Tracxn, big-ticket deals of over $500 million are also showing an upward trend with seven such deals so far this year compared with eight in 2019 and 12 in 2020. In terms of overall funding, Indian start-ups have fetched $24.5 billion in 2021 across 729 deals, against $22.05 billion raised in 2020 over 1,000 deals and $19.94 billion raised across 1061 deals in 2019.
Top sectors
“Some sectors benefited disproportionately like SaaS, e-commerce, edtech, and healthtech, while others including entertainment, hospitality and travel suffered,” Jatin Desai, Managing Partner, Inflexor Ventures, told BusinessLine.
Desai added that excess liquidity in the economy, and interest rates going down created FOMO (fear of missing out) and people were looking for areas to invest in. “Some of the legacy investors including Family offices and HNIs, who were not invested in the start-up ecosystem, also started allocating a part of their funds into start-ups. More of this reaction was observed at the start of 2021. China’s crackdown on its tech and start-up ecosystem also led to certain foreign funds being diverted to Indian start-ups,” he said.
Said Karan Mohla, Executive Director, Chiratae Ventures: “In the last two years, Indian investors have started investing more. A lot of private equity funds which were not very active earlier have also come in.”
Better exit opportunities
Analysts said that with the increasing number of IPOs and unicorns emerging out of India in 2021, there has been a drastic improvement in the market in providing attractive exit opportunities to the investors.
Desai added: “This wave of start-up IPOs opening up is providing good exit avenues to the investors. Earlier, investors had to wait for M&As and large funding rounds to occur to get an exit.”
“Zomato and other IPOs, being a very 2021 phenomenon, have ensured investors, both in India and globally, that there will be large outcomes through public markets and mergers and acquisitions. And finding good scalable opportunities and a great founding team is hard. That’s why we are seeing higher valuations. We haven’t seen a similar scenario in India earlier,” Mohla added.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.