Good Capital: Indian Technology Review #31
Here’s a glimpse of what the Indian ecosystem looked like in 2015…
- 8 unicorns
- $1.5BN in VC funding
- 5,000 startups
And this is what it looks like today…
- 90+ unicorns
- $38BN+ VC funding
- 60,000 startups
That is a 10X scale in 6 years!
In this issue, I shall explain the key drivers and break down capital inflows into India this past year.
Key Drivers
The India Stack
India stack is the technology backbone for 1.2BN+ Indians that covers identity (Aadhar), payments (UPI, Rupay cards) and data (access to Internet). This deep penetration has enabled Indians to meaningfully use the internet and leverage it for commerce. The next step here is to integrate all of this into an open network for greater ease for both users and businesses.
Higher Disposable Income
Signs of economic prosperity are starting to show – as 140 million households move into the middle class and another 20 million move into the high-income bracket, Indians are expected to spend up to 2.5x more on essential categories like food, transport and housing and 3-4x on services like education, healthcare, entertainment and household care.
Make in India
Make in India is the government’s ambitious plan to transform India into a manufacturing hub. With supply chain disruptions in different areas of the world, India is starting to emerge as a reliable trade partner. While there is still much to do in creating a more business friendly regulatory environment, we are taking the right steps in this direction.
We plan to cover these and other value drivers in more detail in our upcoming editions of ITR.
Now, let’s get into some details regarding the funding activity in 2021.
Timeline
Investment momentum got stronger with the year. Here’s a look at the number of startups that raised funds and the amount of funding –
Deal Stages
Growth stage startups raised roughly $34.3BN across 380 deals. Early stage startups raised $3.7BN across 948 deals. 44 startups that turned unicorn collectively raised around $12.5BN – nearly 1/3rd the total amount. We also saw landmark startup IPOs such as Zomato, Nykaa, Paytm, PolicyBazaar.
Sector Focus
Fintech and Edtech continue to be the most prominent sectors – both attracting over $5BN in capital. E-commerce (including social commerce) and SaaS had meaningful contributions. Finally, D2C, Logistics and EV’s were amongst the top emerging sectors.
Source: Entrackr
Looking Ahead
The momentum seems to be continuing to 2022 – Indian startups have already clocked over $7.5BN in investments in 2 months of this year.
In addition, large global venture funds with an Indian presence like Accel, Sequoia, Lightspeed and Matrix are all expected to close new funds in the $500MN – 2BN range, providing further downstream capital from where we invest. Late-stage/crossover funds like Tiger Global, D1 Partners, Alpha Wave Global and SoftBank are also heavily investing in growth-stage deals, reaffirming the robustness of the active ecosystem and the India opportunity.
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Warm regards,
Rohan Malhotra
PS - Find our previous editions here
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