Indian Startup Funding 2020: An Analysis

Every New Year brings with a promise of new beginnings and opportunities galore. The dawn of 2020 was no different and the Indian startup eco-system was riding on the high of the raising $14.5 billion in funding through 2019. Shortly the global pandemic knocked on all our doors and the world had no choice but to reluctantly let in the ominous visitor that is still wreaking havoc on the business world and our personal lives alike.

Consequently, the amount of total funds raised through 2020 fell to $9.3 billion. This was the first time in the last five years when the Indian startup ecosystem raised funds below $10 billion. The year also saw the total number of deals fall from 1,185 in 2019 to 1,088 in 2020. Deal ticket size also took a hit as rounds worth $100 million or more reduced from 26 in 2019 to 20 in 2020 and rounds worth $50-$100 million fell from 27 to 13.

While the pandemic did cause massive damage to the markets and investor activity another factor that affected funding was the absence of Chinese capital. As tension mounted between the two nations, bigwig investors such as Alibaba and Ant Group (Alibaba’s affiliate) and Tencent gradually started maintaining a distance from Indian funding landscape.

The Fall & The Rise
While the year started strong with some big ticket deals, yet the second quarter saw a drastic fall in investor activity as the entire nation was put under a strict lockdown. It was during the mid of the third quarter when investor activity restarted and a positive sentiment rocked the entire market after a long lull. In September the startup ecosystem saw the most investor activity with $1.9 being in raised in funding collectively. December, usually a month of low investor activity was abuzz with deals as a total of $1.5 billion was invested across companies including Zomato, Delhivery, and InMobi’s Glance in 2020.

The Winners
The biggest winner during 2020 was the edtech segment. With schools closing down physically, the entire education sector moved online. The virtual education world received massive interest from consumers as parents flocked to online learning platforms to keep their children sharp. Consequently edtech players made hay while the sun shone and the sector received 1.8 billion in funding, the highest amount raked by any sector through 2020. Byju’s stayed in the headlines throughout the year as the edtech firm alone raised $1.02 billion. Unacademy raised $260 million and entered the coveted Unicorn club in the second half of the year.