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Funding for Indian start-ups continues to grow

Funding for Indian start-ups continues to grow

Indian start-ups companies received around $6.5 billion collectively in funding in the April-June 2021 quarter, according to research by Nasscom-PGA Labs. And it found that 11 of these start-ups became ‘unicorns’ – a unicorn being a privately owned start-up company valued at over $1 billion.

During the second quarter, 160 funding deals were closed — up 2% from the January-March period.

“Q2 2021 has been impeccable for the start-up growth story. From being the most funded quarter, it has also added the most number of unicorns. Standing tall during the pandemic second wave headwinds, Indian start-up ecosystem has shown a strong resilience in this quarter,” Nasscom-PGA Labs’ report said.

Funding raised in June quarter was at $6.5 billion, up by 71% quarter-on-quarter.


Confidence increasing

The biggest deal during the quarter was the $800 million fund raised by food delivery platform Swiggy, followed by ShareChat ($502 million), Byju’s ($340 million), PharmEasy ($323 million) and Meesho ($300 million), the report said.

Pine Labs raised $285 million, Delhivery $277 million, Zeta $250 million, Cred $215 million and Urban Company $188 million in the June 2021 quarter.

“The Indian start-up ecosystem that generated 53 unicorns till June 2021 has made great strides in the April-June quarter. From recording most funding deals to adding the most number of unicorns in a quarter, investors’ confidence in good-quality digital businesses has strengthened like never before,” according to Abhishek Maiti, PGA Labs Director, Competitive Intelligence.

He added that the number of deals on the cards “looks promising” for the second half of 2021, India’s economy continues to open up after series of lockdowns and sectors such as fintech, foodtech and healthtech continue to benefit from pandemic-induced adoption.


Fintech on top

Fintech was the most funded sector, accounting for 27% of the total deal value in the reported quarter. This was followed by foodtech (13%), enterprise tech (11%), edtech (10%), and media and entertainment (8%).

Growth stage funding accounted for 61% of the total deal value, it added.

About 100 start-up firms received funding in the early stage, accounting for 9% of the total funding raised.

The June 2021 quarter also saw the rise of 11 unicorns (companies with $1 billion valuation) — Urban Company, Cred, Meesho, Groww, ShareChat, PharmEasy, Zeta, BrowserStack, Moglix, Gupshup and Chargebee.

This has taken the total number of unicorns in the country to 53 as of June 2021.

About 27% of the unicorns added in the second quarter of 2021 were fintech start-ups, while 18% each belong to SaaS (software as a service) and social commerce, the report said.

Interestingly, Tiger Global invested in 64% of the unicorns during the second quarter of 2021.


B2B start-ups raise $1.9bn

The report noted that business-to-business (B2B) start-ups raised over $1.9 billion across 85 deals, with an average deal size of $22 million. The top three B2B funded start-ups were Zeta, Razorpay and Axtria.

B2C start-ups raised over $4.2 billion across 75 deals, with an average deal size of $56 million.

Top three B2C funded start-ups were Swiggy, ShareChat and Byju’s, the report added.