Privately Held Indian Companies Raised $28.35 Billion between Jan & Aug

The year 2021 has been ideal for start-up growth. The Indian start-up ecosystem has showed tremendous resilience in this quarter. Despite the fact that the catastrophic second wave of the Covid-19 pandemic affected businesses across industries in early 2021, venture capital (VC) and private equity (PE) firms continued to cherry-pick opportunities and park their funds in Indian enterprises with growth potential and strong returns. According to statistics from analytics firm Tracxn, privately-held companies, including startups, raised a total of $28.35 billion in total capital between January and August this year, divided among 1367 deals.

During the time period under consideration, the top-funded industries were e-commerce, financial technology (fintech), enterprise applications, education technology (edtech), food and agritech. According to Tracxn's statistics, Walmart-owned Flipkart raised $3.6 billion in a Series J funding round headed by GIC, Canada Pension Plan Investment Board, SoftBank Vision Fund 2, and Walmart in July of this year. Flipkart Group was valued at $37.6 billion after the investment round. Meesho, a social commerce platform, raised $300 million, while Udaan, a business-to-business (B2B) e-commerce startup, raised $280 million in the space.

The data pertains to investment rounds that took place between January 1 and August 31, 2021. Tracxn went on to say that the month of July this year saw the most fundraising, with $7.9 billion divided across 163 agreements.

“Some business-to-consumer (B2C) industries like edtech, food delivery and e-commerce have seen a significant acceleration in maturity by two-three years due to the pandemic and hence these players have been raising capital to scale up appropriately. In other industries, entrepreneurs are betting big on the earnings cycle turning positive over the next 3 -5 years,” says industry expert Sandeep Das.

With sectors like fintech, food tech, and health tech attempting to thrive from pandemic-induced demand. Fintech startups attracted the maximum funding.

According to Tracxn, prominent deals in the fintech area include Pine Labs, a digital payments service provider, raising $600 million, BharatPe, a fintech firm, raising $370 million, and Cred which is a Bengaluru-based company, raising $215 million, valuing the company at $2.2 billion. In the last several months, edtech startups such as Byju's, Unacademy, Eruditus, and upGrad controlled the roost in terms of raising funding. During the time under review, both upGrad and Eruditus joined India's coveted unicorn club, which is comprised of privately-held enterprises with a valuation of $1 billion or more.

Experts point out that some of this buoyancy is related to the monetary policy stance taken by the U.S. Federal Reserve. “As the Fed intends to continue the easy monetary policy for the next 3-4 quarters, the money supply is likely to continue. In addition, the expectation of a significant recovery in earnings and massive government investment should see entrepreneurs looking to raise more funds. Some tech investors might be looking at India as an alternative to China given the Chinese government crackdown on the tech sector,” says Das, the author of Hacks for Life and Career: A Millennial’s Guide to Making it Big.

According to Tracxn statistics, Indian enterprises, including startups, raised $33.2 billion in total capital over 1321 agreements between January 1 and August 31, 2020. The most funded companies last year were Reliance Industries Ltd's technology and digital services arm (Jio Platforms) and retail segment (Reliance Retail Ventures). In the months leading up to the nationwide lockdown in 2020, Reliance Retail Ventures raised $6 billion in expansion capital, while Jio Platforms raised a stunning $20 billion.

Indian startups raised $6.5 billion in total funding in the April-June 2021 quarter, with 11 of them joining the unicorn club. In the second quarter, 160 funding transactions were executed, an increase of 2% over the January-March period. The total amount of money raised in the June quarter was $6.5 billion, increasing 71% year over year.

According to the report, the $800 million funds raised via the Swiggy online food ordering and delivery platform was the most significant transaction during the quarter, followed by the Indian social media platform ShareChat ($502 million), ed-tech startup Byju's ($340 million), healthcare aggregators PharmEasy ($323 million) in June.

In the June 2021 quarter, Pine Labs, a merchant platform startup, raised $285 million, Delhivery raised $277 million, Zeta, a modern banking tech startup, raised $250 million, Kunal Shah's Cred raised $215 million, and Urban Company, an online home services platform, raised $188 million.

All startups that are just getting started need to make sure that their growth remains unhindered. With the support of funding, the company expands. Incorporation, business permits, insurance, buildings, and equipment are all covered by the funds. It also aids in the creation of marketing collateral and the recruitment of relevant personnel. In order to attract clients, it also sponsors the production of items as well as the marketing and distribution of services. As a result, every business is continually looking for funding.