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Venture capital funding for Indian firms hit a six-year high in the first six months of 2021. According to data from Venture Intelligence, $12.1 billion of venture capital funding was pumped into Indian companies in the January-June period of 2021.
Contributing factors
Bhaskar Majumdar, Managing Partner, Unicorn India Ventures, said that this record-breaking surge in VC investments is due to multiple factors.
“On the capital availability side, over the years, India has been increasingly becoming the destination for VC investments, driven by both increasing interests of large global investors, as witnessed by the 30-plus big-ticket investments amounting to over $5 billion just in the first quarter of 2021, and increasing interests of domestic investors as witnessed by the ballooning deal volumes at the early stages as well,” Majumdar noted, adding: “The flurry of IPOs are also giving investors clear indications of ample depth in the markets, especially in later stages, which is also bolstering this sentiment.” Majumdar said that in the short term, the first half of 2021 saw numerous investments, both in early and later stages being finalised, which were delayed due to the pandemic in 2020.
Furthermore, the better-than-expected post-pandemic recovery in revenues and by implications the value creation that the start-up ecosystem is witnessing, has changed the playbook from being about survival and cash conservation to aggressive expansion and fund-raising.
Unique ideas
Start-ups that have paved the way for IPOs are giving confidence to early-stage investors to invest in more disruptive and unique ideas, as a clear path to exits is now emerging, said Ankur Mittal, co-founder, Inflection Point Ventures.
This jump in venture capital funding this year can be observed across the globe as well. According to Crunchbase, the global venture funding in the first half of this year was 95 per cent more than the $148 billion that was pumped in during the same period in 2020.
Total deals
A total of 382 venture capital funding deals were made in H1 2021 in India, and the firms that received the highest funding include Byju’s, Swiggy, Zomato, ShareChat, Dream11, PharmEasy, Lenskart, FirstCry, Meesho, and Pine Labs. Experts said they expect this surge in VC funding to continue for the rest of the year as well.
“We see this momentum growing as more CXOs turn to angel investing, existing investors getting good exits with higher returns and, most importantly, we see more scalable business ideas coming from the founders, which are attractive to investors, both early-stage and institutional,” said Mittal, adding: “Good exits are being secured. Eventually, all this money will be redeployed back into the ecosystem, thus contributing to the growing momentum.”
“Lastly, foreign VCs that entered India over a decade ago have today emerged as one of the successful VCs here and have built an envious portfolio. Their success is also encouraging more international funds to look at India as a serious destination for venture investments,” Mittal noted.
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