NEW DELHI: The coronavirus outbreak has put the brakes on funding for Indian start-ups. Owing to economic and political uncertainties, especially in March when the disease was declared a pandemic, Venture Capital (VC) investments in India fell sharply. Investments fell from $6 billion during October-December 2019 to $2.2 billion during January-March 2020, consultancy firm KPMG said in its ‘Venture Pulse’ report.
Going forward, VC funding might witness steeper decline, as India has been under a lockdown since March last week, it said.
“VC investors are already starting to ask the question: ‘How will your business be impacted by Covid-19?’ This is a question everyone will be asking for the next few quarters. Here in India, we are beginning to feel the full impact of the virus. Over the next quarter, while the pipeline will likely remain strong, deal flow is expected to slow down. A lot of deals will probably get deferred to the later half of the year,” said Nitish Poddar, partner and national leader (private equity), KPMG India.
It also remains to be seen how much the very recent lockdown of the entire nation will impact venture funding trends. So far in Q2, VC investments in India have remained abysmal with few exceptions.
Despite these challenges, India saw a number of good-sized deals in Q1. Edtech was a big winner with Byju raising $400 million, Unacademy raising $110 million, and Aakash Educational announcing its acquisition of Meritnation. Mobility firm Bounce too raised $150 million.
KPMG expects edtech to remain a hot sector for VC investment, along with autotech, healthtech related to fitness as well as gaming.
