Increase in funding activity was noted across all sectors, both in terms of value as well as volume.
Indian startups have got record funding in Q3 of CY21, with investment totaling USD 10.9 billion across 347 deals – the first-time investments in a quarter have crossed the USD 10 billion mark, as per the PwC India report titled, “Startup Perspectives – Q3 CY21.” This was twice the amount of funding received in Q3 CY20 and an approximate increase of 41% when compared to Q2 CY21.
An increase in funding activity was noted across all sectors, both in terms of value as well as volume. However, FinTech, EdTech and SaaS are the top three hot investment sectors in CY21, together accounting for approximately 47% of the total funding activity. The FinTech sector saw a fourfold increase in funds raised in the first three-quarters of CY21 when compared to the first three-quarters of CY20. Six FinTech companies attained unicorn status.
Discussing the investment in startups 2021 thus far, Amit Nawka, Partner – Deals & Startups Leader, PwC India, said, “Start-ups have leveraged the accelerated digital adoption seen amongst businesses and individuals alike to create newer business models and this is driving investor interest in a big way. We are seeing the average deal size increase and quicker funding rounds which has led to a surge in deal activity across sectors, since early this year.”
Startup Perspectives for Q3 of CY21 – A snapshot
● Fintech investments: FinTech investments in India in CY21 have grown exponentially. In the first three-quarters of 2021 investments worth USD 4.6 billion in the FinTech space were recorded, an increase of approximately 3x from USD 1.6 billion in 2020. Investments worth USD 2.5 billion for 53 closed deals were recorded in Q3 of CY21 alone across various stages of investment. The FinTech ecosystem saw investments across the spectrum of business with investors showing a renewed interest in companies operating in the segments of InsurTech, WealthTech, neobanks, and financial technology enablers.
● Stages of funding: Approximately 84% of the funding activity was driven by growth- and late-stage deals. However, these represented approximately 39% of the total deal activity (count terms). Around 61% of the total deal activity consisted of early-stage funding rounds for USD 1.6 billion – (average ticket size per round USD 4 million) – early stage/seed companies. Pre-IPO round raised for $880 Mn in CY21 by companies nearing IPO – Ola cabs, Droom, Pine Labs.
● City-based funding activity: Bengaluru and NCR continue to be the key start-up cities in India, together contributing around 76–78% of the total funding activity in the first three quarters of both CY20 and CY21, followed by Mumbai and Pune.
● Global and Indian unicorns: A total of 114 private start-ups (globally) became unicorns in CY20. The number increased drastically in 2021 as 371 start-ups have already become unicorns in the first three-quarters of CY21. Geographically, maximum unicorns in Q3 CY21 have come from the US, with India in the second position. FinTech and SaaS are the most represented sectors in Q3 CY21 both globally and in India. Three decacorns (privately held startups valued at over USD 10 billion) were added in 2021 – all from China and Hong Kong. As of now, India has two decacorns (Paytm and Byju’s).