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VCs pump USD 10.15 billion into Indian startups in H1 2021

Written by Moulishree Srivastava Published on     2 mins read

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About 990 investors pumped USD 10.15 billion in venture capital across 543 startup deals in H1 2021.

Indian startups raised USD 10.15 billion in venture capital in the first half of 2021, more than double the USD 4.85 billion they attracted in H1 2020 and a notch higher than the USD 9.94 billion they received in the whole of last year.

About 990 investors pumped in this amount in 543 deals, which grew 28% in H1 2021 from 424 deals in the corresponding period last year, said a report by local media YourStory. There were 491 unique startups that were funded, compared to 376 in H1 2020, with a significant portion of them being in the early stage.

Early-stage startup funding more than doubled to USD 1.1 billion across 405 deals in H1 2021 from USD 536 million in about 280 deals in the corresponding period last year. Meanwhile, growth-stage startups attracted USD 1.92 billion across 55 deals, witnessing an almost 80% increase in the amount of funding raised and a 23% decline in the number of deals compared to H1 2020. On the other hand, late-stage funding accounted for over two-thirds of the total USD 10.15 billion raised by local startups. At USD 6.72 billion, late-stage startups received 2.6x more funding compared to H1 2020, as investors bet big on internet startups with huge reach and scale amid the pandemic-led digitization across the country.

The top three sectors in terms of startup funding were fintech, edtech, and food tech, while the top three startups that raised the most funding in H1 2021 were edtech giant Byju’s (USD 1 billion), food tech unicorn Swiggy (USD 800 million), and local language social network ShareChat (USD 502 million), the report noted.

Since earlier this year, Tiger Global and SoftBank have been generously pumping in money into the world’s third-largest startup ecosystem. In fact, together they minted 11 unicorns out of 15 new unicorns the country saw in H1 2021, although the majority came from the New York-based hedge fund’s portfolio. For context, only 11 startups entered the elite USD 1 billion club in 2020. Following their suit, the investor community has been cutting more and fatter checks across stages, despite the second wave of COVID-19 that peaked in May.

As the Indian startup ecosystem matures, driven by the increasing number of second and third-time entrepreneurs and more startups planning IPOs while giving exits to their early backers, investors are becoming more bullish by the day.

The strong investment activity can also be attributed to the fact that the VCs, who adopted a cautious funding approach last year after the COVID-19 pandemic hit India, began 2021 with USD 6 billion India-focused dry powder—the capital available to invest in the local startup ecosystem. Given the massive digital adoption happening in the world’s second-most populous country due to the pandemic, these investors don’t seem to be holding back anymore.

Overall, Indian startup funding is expected to reach anywhere between USD 12 billion and USD 17 billion by the end of 2021, witnessing record investment activity, the report observed.

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