There seems to be an optimism among venture capital investors in the Indian start-up ecosystem despite the looming third wave of COVID-19 pandemic and a delayed economic recovery. During the period between January and July 2021, Indian companies were second only to their Chinese counterparts in terms of VC funding value among APAC countries.

According to data supplied by the Indian Private Equity and Venture Capital Association (IVCA) and Venture Intelligence, venture capital companies invested a total of $17.2 billion in the Indian startup ecosystem from January to July 2021.

Venture capital funds pool investors’ cash and lend it to startups and small enterprises with the potential for long-term growth. This is a critical source of finance for businesses who do not have access to other sources, and it usually carries a significant level of risk (and possible reward) for the investor.

This is significantly more than the $11.1 billion and $13 billion invested by venture capitalists in 2020 and 2019, respectively.

Seed to Series F investments in companies less than ten years old, as well as late-stage innovation investments, were all part of the VC funding.

Udaan, Lenskart, Swiggy, PharmEasy, Meesho, Pine Labs, Zeta, CRED, Razorpay, HealthifyMe, BYJU'S, Unacademy, Eruditus, Vedantu, Dunzo, Bira 91, Boat, Mamaearth, MyGlamm, Uniphore Software Systems, Yellow.ai, Entropik, and others were among the major VC investments.

According to IVCA, the high transaction flow is projected to continue in the second half of the year, with activity predicted in the AI/ML, Edtech, and food tech sectors.

When compared to 2019-20, the average VC deal cheque size increased in 2021 across stages. According to the study, seed funding totaled $1.8 million in 2018, compared to $1.2 million in 2019. With $6.8 million spent over 110 agreements so far, the amount invested in Series A and B finance has increased marginally. In addition, growth stage deals nearly doubled this year, from $4.9 million in 2020 to $7.5 million in 2021.

It noted that until July 2021, the average amount invested in the late-stage innovation ecosystem was $217.57 million across 38 agreements.
IVCA President Rajat Tandon quotes, "There are tailwinds supporting exits because the ecosystem has started actioning IPOs and offshore listing for Indian startups is under consideration, with the Government of India primarily in sync with this."

Users have been converting to digital shopping more during the COVID times, he continued, and the Indian consumption storey is definitely playing out.

The state of the Indian Startup-VC Market looks stable and promising, amidst positive sentiment, cautious optimism, increased funding numbers, larger cheque sizes even at early-stage deals, and the wonderful Government of India support, refer to the recent announcement of opening up domestic capital from EPFO and LIC for Indian AIFs and startups.

According to the survey, SoftBank Corp. topped the list with $3.5 billion in investments over the last three years, followed by Tiger Global, Temasek, Sequoia Capital, and Prosus Ventures.

According to the report, IIFL VC was the most active VC investor with AIF (Alternative Investment Funds) vehicles, with about $260 million invested, followed by Matrix Partners India with $110 million and Mirae Asset Global Investments with $91 million.

According to sources the consumer sector accounted for 119 rounds of funding in the five-year period beginning in 2016, followed by retail with 75 rounds, transportation and logistics tech with 33 rounds, food and agriculture technology with 31 rounds, and fintech with 21 rounds.

Rising smartphone penetration and affordable mobile Internet access have turned India into a digital-first economy. As a result, tech startups stand to benefit the most from this trend.

Overall, India's VC ecosystem has generated significant economic benefit for the country. Over the last eight years, VC investments have played a critical role in building India's start-up ecosystem, which has created more than 3 million jobs directly or indirectly, second only to the United States and China internationally.

The Indian Venture Capital and Private Equity Association is a membership-based national organization that represents venture capital and private equity firms, promotes the industry in India and abroad, and supports investment in high-growth businesses. Venture capital firms, institutional investors, banks, incubators, angel groups, corporate advisers, accountants, lawyers, government agencies, academic institutions, and other venture capital and private equity service providers are among the IVCA's members. The majority of India's active venture capital and private equity businesses are represented by members. Seed capital, early stage startups, later stage expansion, and growth finance for management buyouts/buy-ins of established companies are all services provided by these firms.

Launched in 2002, the Venture Intelligence service is India's leading source of information and analysis on private company financials, transactions, and valuations. Arun Natarajan, a media entrepreneur with over a decade of research and business journalism expertise, leads Venture Intelligence. Arun previously worked for The Hindu-Business Line, a renowned Indian business daily, as a senior research analyst.