BENGALURU: India’s start-up ecosystem has taken one of the worst hits in 2020, impacted by Covid-19 disruption, blocking of Chinese funds and app bans.
Funding in start-ups for the year was estimated to be 30 per cent lower over last year at $8.4 billion. Overall, there were just 765 deal closures during January-November 2020, data sourced from Burgeon Law, a firm that deals with early-stage start-up investments, showed.
However, the pandemic could not dampen the sky-high valuations for start-ups, with 11 new unicorns, or billion-dollar companies, taking birth this year — the highest so far.
These are fintech apps such as Razorpay and Pine Labs, FirstCry, lifestyle retailerNykaa, Bengaluru-based SaaS start-up PostMan, Unacademy, Cars24, Zenoti, Daily Hunt and Glance. In 2019, nine start-ups turned unicorns, according to data from Venture Intelligence.
The fundraise this year was almost equivalent to the funds raised in 2015. Unicorns such as Byju’s, ReNew Power, OYO Rooms, Swiggy, and Zomato are some companies that have garnered most of the funding. Sector-wise, ed-tech bagged $1.8 billion, followed by fin-tech ($ 1.58 billion), prop-tech ($ 1.03 billion), food-tech ($ 0.6 billion) and e-commerce/retail ($ 0.53 billion), the report noted.
As Covid-19 hit businesses worldwide, the start-ups also felt the impact although for some segments like edtech, e-commerce, food delivery, digital payments,e-gaming, the revenues were back to pre-COVID levels towards the end of the year. However, the retail, hospitality, travel, mobility start-ups continue to reel under pressure as people are keeping indoors and spending less on leisure or recreation activities.
Amidst the India-China standoff and subsequent modifications in the FDI regulations along with ban on Chinese apps, funding from China was also impacted. Alibaba’s affiliate Ant Financial which earlier was expected to put in $150 million in food tech unicorn Zomato announced that it has put all its investment plans in India on hold following the Indian government’s tough stance.
Alibaba, according to sources, was planning to raise $1 billion towards investments in India in early 2022. The Chinese internet giant has supported unicorns like Paytm, Zomato and Big Basket in India.
Data from venture intelligence also suggested that funds raised by Indian startups in the first half of 2020 from Chinese investors stood at $166 million compared to$197 million in the same period during the previous year.
Overall, investors continue to place their bets on deep tech, innovative startups which had solutions for a new-normal environment across the globe.
Billion dollar start-ups
Pine Labs $2 billion Funds raised from Mastercard, Lonepine Capital
FirstCry $1 billion $150 million funds raise from SoftBank
Nykaa$1.2 billion Steadview capital, actors Aalia Bhatt, Katrina Kaif invested
PostMan $2 billion Recently raised $150 million
Zerodha $3 billion Grew manifold without any funding
Unacademy $2 billion Raised more than $360 million from SoftBank, etc.
Razorpay $1 billion The start-up has raised $100 million from GIC, Sequoia
Cars24 $1 billion Received $200 million funding
Zenoti $1 billion Entered unicorn club with $160 million fundraise
Daily Hunt $1 billion $100 million raised from Google, Microsoft
Glance $1 billion Google, Mithril Capital invested $150 million in the start-up