The year that was marred by COVID-19 pandemic and the ensuing economic slowdown had its affect on the venture capital raised by Indian startups which saw a dip of 34% compared to 2019. According to the data collated by market research firm Tracxn, Indian startups have managed to raise USD 9.3 billion till December 23 this year compared to USD 14.2 billion last year for corresponding period.
However, investors believe 2020 was still way better than 2016, when Indian startups went through a dry spell, with funding dropping to USD 3.51 billion from over USD 7 billion a year earlier.
The funding activity, which was robust in the first quarter of the year, declined sharply in the three months ending June, as the country remained under lockdown with business activities coming to a screeching halt. However, on the back of the rapid tech adoption across India, investments in startups bounced back by July and August, much earlier than what the larger VC community was expecting. Overall, there were 1,088 funding rounds, said a report by local media Economic Times (ET), citing the Tracxn data.
By the last quarter, confidence of VC firms in tech startups returned as they began writing bigger checks, particularly those in the tailwind sectors like edtech and enterprise tech. This month alone, homegrown startups attracted over USD 1.5 billion from these investors, the report added.
Major venture capital firms doubled down on early-stage deals as they sought to back the firms catering to the post-pandemic needs of consumers and enterprises.
There were 24 funding rounds of USD 100 million and above, totaling USD 4.71 billion, as compared to 28 such rounds amounting to USD 7.86 billion in 2019, the ET report said.
The sectors that attracted the highest funding this year include edtech, e-grocery, fintech, consumer healthcare, and SMB-focused SaaS companies. The continued investor interest led to 11 companies achieving unicorn status this year, as opposed to nine last year.