This article is an overview of DataLabs by Inc42’s upcoming Annual Indian Tech Startup Funding Report, 2019 which offers a detailed analysis of the investment trends, mergers & acquisitions (M&As), startup policies and macroeconomic factors that influenced the Indian startup ecosystem from 2014-2019. Read all articles in this series
With the Union Budget 2020 around the corner, all eyes are set on which track finance minister Nirmala Sitharaman would put India’s economy this financial year. Delhi-NCR has always been at the centre stage of the economy thanks to its position as the capital of India, and over the past few years, we have seen the capital region rise up among the ranks to become a torchbearer for the startup ecosystem as well.
Although Bengaluru is considered as the Silicon Valley of India and with the lead in funding amount for 2019 retained the title of being the startup capital of India, Delhi-NCR is fast catching up. Factors such as high-speed connectivity, higher per capita income of $4,686 which is 2.63x higher than the Indian state-level average are aiding the growth of the startup ecosystem and innovation culture in the region. Add to that the fact that Delhi NCR has plenty of unicorns to inspire other startups.
According to the Annual Tech Startup Funding Report 2019 by Datalabs by Inc42, Bengaluru startups secured the most funding in 2019 with $5.3 Bn across 267 deals, with Delhi just behind raising $4.5 Bn across 226 deals. Despite 8% fall in funding, the funding amount recorded a 5% jump in funding in 2019.
From 2014 to 2019 both the funding amount and deal count witnessed moderate change year-on-year with a total of $20 Bn being invested across 1,442 deals.
In fact, the top funding grossers for 2019 — Paytm, Delhivery, Lenskart, Renew Power and DMI Finance — are all from the Delhi-NCR region, indicating that the power centre in the Indian startup ecosystem might just be moving to Delhi. These players together grabbed 18% of the total funding amount in 2019, amounting to approximately $2.2 Bn.
Delhi NCR Continues Chasing Bengaluru For The Top Spot
Although Delhi/NCR has fallen a little behind in terms of the total funds raised, it matches Bengaluru in average ticket size. With a 2% spike in average ticket size in 2019, Delhi NCR had an average funding ticket size of $25 Mn.
Delhi Sees Bigger Funding Deals In 2019
While the seed funding fell across most major startup hubs, late-stage funding continues to grow in Delhi-NCR, indicating that investors prefer to go with safer bets. The CAGR for funding amount stood at -15% and -2% for seed and growth stage from 2015-2019 respectively.
When it comes to the average ticket size, Delhi with $20 Mn was ahead of Bengaluru ($19.85 Mn) and Mumbai ($8.6 Mn). This also indicates funding predominantly for late-stage startups. Among late-stage startups, the count of funded startups in ecommerce, real estate tech and fintech sectors was higher than others.
Although seed rounds had the most number of deals in Delhi, the yearly count suffered a 16% drop compared to 2018. The total deal count in late-stage startups for 2019 was 43, which is 5% increase compared to the previous year.
The increase in the late-stage funding deals is something that’s a common trend across the major startup cities in India. Will this streak end in 2020 with the rise of seed funding deals?
In the case of the year-on-year growth of funding amount for late-stage rounds, Delhi saw a growth of 8% for the year, which is higher than seed-stage funding growth rate which has CAGR of 5%.
Enterprise Tech On The Rise In Delhi
Fintech, enterprise tech, ecommerce, consumer services and healthtech have continued to dominate on the basis of the number of funding deals and count of unique startups funded. However, this stronghold is loosening as these big 5 sectors combined made 61% of the total deal count in 2019 compared to 65% share in the previous year.
In Delhi, the enterprise tech and fintech sectors accounted for 34% of all seed-stage deals in 2019. Further, real estate tech startups recorded the biggest surge in funding deals with a 60% surge, while travel tech recorded the biggest downfall in terms of deals.