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News Roundup: Indian Startups End 2020 On High Note After Pandemic Crunch & More

News Roundup: Indian Startups End 2020 On High Note After Pandemic Crunch & More

The final numbers for the year suggest that Indian startups have weathered the worst of the storm, and could look forward to better days

Things looked grim from April to June, as a spate of layoffs in Indian startups and the overall health of the economy didn’t bode well for investors who would have otherwise looked to fund seed and growth-stage startups

As the lockdown was gradually lifted and the economy opened up, things got better. Notably, funding for Indian startups increased 167% quarter-on-quarter in the third quarter ending September

Despite all the talks of doomsday for the Indian economy due to the pandemic, the final funding tally for the year suggests that Indian startups have weathered the worst of the storm, and could look forward to better days. 

Understandably, things were grim from April to June, as a spate of layoffs in Indian startups and the overall health of the economy didn’t bode well for investors who would have otherwise looked to fund seed and growth-stage startups. However, as the lockdown was gradually lifted and the economy opened up, things got better. Notably, funding for Indian startups increased 167% quarter-on-quarter in the third quarter ending September. The same is reflected in the “The Annual Indian Tech Startup Funding Report 2020”, by Inc42 Plus

The total funding amount for the Indian startup ecosystem has fallen by 10% year-on-year (YoY) to $11.5 Bn, however, the deal count has increased 14% to 924 deals. 

Our earlier report had predicted that the total funding amount could fall anywhere between 11%-36% YoY in 2020. That the funding has declined by just 10% is thus a positive indication for future growth, also the maturity of the country’s startup ecosystem. 

On the other hand, the M&A count for the Indian startup ecosystem was the lowest in six years in 2020, after coming off a five-year low in 2019. It is understood that the Covid-19 pandemic chilled many acquisition talks this year, while the few startups that did get acquired managed to do so on the basis of their growth before the year, or for survival as distress sales. BYJU’s acquisition of WhiteHat Jr stood out among the top acquisition stories of the year

Meanwhile, edtech startup Unacademy, which entered the unicorn club in 2020, also emerged as the biggest acquirer. The Bengaluru-headquartered startups acquired six edtech startups in 2020, the last one, NeoStencil being announced on December 30

NeoStencil was founded by Kush Beejal in 2015 and offers test prep courses for entrance examinations, government jobs, law exams and more. While Unacademy has not revealed any financial details of the transaction, NeoStencil would add to its arsenal of test prep platforms.

As for the sector-wise distribution for M&As, 16% of the total M&A deals were for edtech startups, 13.6% for ecommerce and 11.1% for fintech. Despite the slowdown in M&As, funding for growth-stage startups continued unabated in India this year — 11 Indian startups defied the pandemic’s impact to enter the unicorn club in 2020

Other News 

  • From Jio’s ambitions of pioneering India’s 5G revolution in 2021 to the company’s plans of rolling out low-cost 5G enabled smartphones through its partnership with Google, we detailed what to expect from the Jio ‘super-app’ of sorts in the new year. Read the full story here
  • WhatsApp also seems to have intentions of becoming a ‘super-app’. And the messaging platform could use its huge userbase in India as a testing ground, where it is planning to roll out facilities such as micro-credit and insurance, in partnership with banks. Its payments application WhatsApp Pay has also recently launched and would look to scale up. We detailed what to expect from WhatsApp in 2021
  • From Swiggy’s delivery workers to Ola and Uber’s cab drivers, 2020 saw India’s gig workers protest against these companies on a variety of issues, chief among them being a loss of pay. As the year came to a close, we looked at some of the most pressing concerns expressed by India’s gig economy in 2020
  • From non-state actors looking to target Indian pharma companies as part of corporate espionage for stealing Covid-19 vaccine research data to Chinese hackers looking to ‘teach India a lesson’, 2020 saw a spate of cyber attacks on India Inc. As the year winded down, we spoke to cyber experts, who helped us understand the reasons behind the rise in cyber attacks in India, also talked about the measures that need to be taken by Indian companies to ward off cyber threats in 2021. 
  • Even as Flipkart and Amazon tout the growth of their native handicraft and artisan-focussed seller programmes, the Indian-government affiliated Khadi and Village Industries Commission (KVIC) is reportedly planning to launch a dedicated ecommerce portal, which may disrupt things for the ecommerce giants. 

From the funding and acquisitions corner, about $34 Mn was invested across 13 Indian startups this week. 

Among the movers and shakers this week, Amazon India has appointed Abhishek Mahapatra as the director of consumer communications. 

We will be back with next week’s News Roundup.