In the Indian startup ecosystem, 2021 has turned out to be a milestone year—record capital inflows, an unprecedented number of startups entering the unicorn club, and startups going public.
For context, local startups raised over USD 34 billion in 2021—a whopping 200% more than last year. 41 startups turned into billion-dollar companies so far this year after landing big checks from marquee investors like Tiger Global and SoftBank. Furthermore, a slew of high-profile tech startups went public, proving the market appetite for new-age firms, pleasantly surprising the local startup and VC communities.
As 2021 draws to a close, KrASIA examines three emerging sectors that stood out this year.
Crypto unleashed
The rise of crypto startups in India has been the biggest surprise of 2021 for the local startup ecosystem. According to the data collated by business intelligence firm Venture Intelligence, local cryptocurrency startups raised USD 485 million from private equity and venture funds, almost 20 times more than USD 24.4 million they received in 2020.
In spite of uncertainty over the regulatory framework in the crypto sector, investors have remained bullish on the sector, with millions of millennials and Gen Zs investing in cryptocurrencies. At 100.7 million, the South Asian nation has the highest number of crypto owners in the world. In comparison, the US has only 24.7 million crypto owners.
For the first time, Indian crypto startups have joined the unicorn club this year. CoinDCX became the country’s first billion-dollar crypto company in August 2021 after raising USD 90 million from B Capital, Coinbase Ventures, and Polychain Capital. Two months later, in October, CoinSwitch turned into a unicorn as big wigs like Tiger Global, Andreessen Horowitz, and Coinbase Ventures wrote it a USD 260 million check. CoinSwitch also marked iconic VC fund Andreessen Horowitz’s first India investment. Besides, both the companies were backed by Coinbase Ventures, the investment arm of American cryptocurrency exchange Coinbase.
Notably, Singapore-based crypto startup Coinstore expanded into India, and silicon Valley-based Draper Dragon Fund, an early backer of Coinbase, is reportedly looking to invest up to USD 100 million in Indian blockchain and crypto startups.
The Indian government is expected to introduce a cryptocurrency bill next year. According to reports, the central bank is pushing for a complete ban on cryptocurrency while the Narendra Modi-led government is leaning toward monitoring and regulating it to keep innovation flowing.
Rise of quick commerce
Last year, online grocery became one of the hottest segments while India was under lockdown due to the COVID-19 pandemic. This year, the segment became even more competitive with the rise of quick commerce—wherein companies pledge to deliver goods within 10–30 minutes—on the back of wider adoption of internet-based services and millions of urban millennials willing to pay a premium for convenience.
Swiggy announced earlier this month that it would invest USD 700 million in express grocery delivery service Instamart. The Bengaluru-headquartered company launched Instamart in Bengaluru and Gurugram in August 2020 to deliver high-demand grocery and household goods to customers in 45 minutes. The company plans to decrease delivery time to 15 minutes with the capital infusion.
Swiggy isn’t the only one betting on quick commerce. A week ago, e-grocery firm Grofers rebranded as Blinkit to underscore its new focus on quick commerce. Until last year, the eight-year-old Gurugram-based platform focused on value over convenience, delivering orders in a few days. Following a USD 100 million check from Zomato in June, it shifted gears and began focusing on fresh produce and grocery delivery within 10 minutes.
Meanwhile, Google-backed hyperlocal services startup Dunzo is in process of setting up 300 micro-fulfillment centers to guarantee delivery within 19 minutes. Aside from these established players, there is a new kid on the block. Quick commerce startup Zepto, which was founded earlier this year and promises 10-minute deliveries, recently raised USD 60 million in its first round of funding at a post-money valuation of USD 225 million. Zepto raised another USD 100 million round earlier this week, more than doubling its valuation to USD 570 million.
Furthermore, Tata-owned BigBasket—the category leader in the country’s e-grocery segment—is reportedly looking to launch an express delivery service, BB Now, which will take groceries to customers’ doorsteps in 10–20 minutes.
There will be a lot of action next year in the quick commerce segment as a slew of companies gear up to corner the soon-to-be USD 5 billion market.
An exciting time for D2Cs
The COVID-19 pandemic has prompted hundreds of millions of Indians to embrace online commerce at a much faster rate, which helped D2C brands gain traction. Data collected by Venture Intelligence indicates that investors took notice and invested USD 1.7 billion in the first three quarters of 2021, compared with USD 270 million in the entire 2020.
Direct-to-consumer brands bypass the traditional supply chain by marketing and selling products directly to consumers online and offline. Consumers are connecting with these brands because they cater to their personal needs across categories such as food and beverages, beauty and personal care, fashion, and electronics.
Over 800 D2C brands operate in the country currently. By 2025, the Indian D2C market is expected to triple to USD 100 billion from USD 33.1 billion last year. The growth will be fueled by rapidly increasing online shoppers in the country. Compared to the 100 million people making purchases online in 2020, India is projected to have more than 350 million online shoppers by 2025, according to a recent report by Bain & Company and Flipkart.
Earlier this year, two D2C startups, meat delivery startup Licious and beauty and personal care firm Good Glamm Group, entered the unicorn club. With more and more D2C startups gaining scale, D2C rollup play—led by three-year-old US startup Thrasio, which buys out small brands that sell on Amazon and scales them—has caught up in India.
This year saw a slew of Thrasio-like startups sprouting in the country including 10Club, Mensa Brands, GOAT Brand Labs, Powerhouse91, Upscalio, and GlobalBees. These companies raised large rounds and acquired online D2C brands. Mensa Brands, a six-month-old startup, became the fastest startup to become a unicorn in the country last month, underscoring the VCs’ confidence and appetite for risk. With a USD 135 million round led by Tiger Global, Accel Partners, Alpha Wave Ventures, and Prosus Ventures, the startup now boasts a billion-dollar valuation.