Indian Startup Funding All Time High; H1 2021 Funding Grew 100% Over Last Year

The period between January and June 2020 was arguably the worst for VC investments and startup funding in India. In particular, it was the opening quarter of the fiscal year FY2021 — April to June 2020 —  which was the hardest for startups. Funding amount witnessed a massive decline of 74%, while Indian startups on an average fired 22% of their total employee count during the pandemic-induced lockdown. But one year down the line from June 2020, there couldn’t be a bigger change in the funding prospects for startups in 2021.

While H1 2020 closed at $5.2 Bn across 390 deals, in H1 2021 (January to June 2021), the total funding raised by Indian startups hit a historic peak of $10.8 Bn raised over 614 funding deals. The total startup funding in the first half of 2021 is already 95% of the total funding amount raised in all of 2020.

Further, this is 2x the funding amount seen in H1 2020 and it also comfortably eclipses the previous historic half-yearly peak of H2 2017, when $7 Bn was raised by Indian startups.

In terms of the number of deals too, H1 2021 pulled ahead of the historic peak of H1 2016, which had recorded 578 deals. In comparison, in H2 2020 (July to December), the deal count was 534, while the total amount raised was $6.3 Bn.

In Q1 2021, Indian startups raised a total of $4 Bn from 311 funding deals, so a bulk of the amount and deal tally came in the second quarter of 2021 (April-June quarter), amid the second Covid wave, which severely affected lives and livelihoods of Indians.

The massive surge — the biggest in nearly five years — in the total funding amount in 2021 is primarily backed by mega deals ($100 Mn+) invested in growth and late-stage startup funding rounds in sectors such as ecommerce, fintech, enterprise tech, edtech, consumer services and healthtech. A total of 31 mega-rounds have been recorded in 2021 so far, in comparison to 28 in all of 2020.

Tiger Global Turns Unicorn Maker

The emergence of 14 new unicorns in 2021 is another major indication of the growing investor appetite around these late-stage startups, which have raised a majority of the funds in the year. That’s compared to 11 unicorns in all of 2020.

When talking about mega investments in 2021, there is no way one can skip Tiger Global, which has taken a giant leap in terms of its Indian portfolio.

The New York-based VC firm has been participating in one unicorn round after another, helping India inch towards its target of 100 unicorns much faster. Out of the 13 startups that have become unicorn this year, Tiger Global has been an investor in eight of them including Infra.Market, Innovaccer, CRED, GupShup, ShareChat, Groww, Chargebee, and Moglix. Overall, it is an investor in almost half of the 56 Indian startups that have entered the Indian unicorn club to date.

Fintech Stays On Top, Enterprise Tech Surges

Fintech and enterprise tech startups have bagged the lion’s share of the funding deals in 2021 so far, with 111 deals for fintech startups and 82 for enterprise tech businesses, out of the total of 614 Indian startup deals.

In H1 2020, edtech startups had surged in popularity among investors and this sector was second in terms of the number of deals, behind fintech. Edtech slipped to the fourth position in H1 2021, even though the number of deals for edtech startups increased this year.

In terms of the funding amount though, edtech is the second largest sector in 2021 so far, with edtech startups accounting for $1.8 Bn in funding. Fintech was the leading sector with $2.3 Bn in funding out of a total of $10.8 Bn.