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$5.2 Bn Funding, 389 Deals: Indian Startup Funding Dropped By 29% In The First Half Of 2020

$5.2 Bn Funding, 389 Deals: Indian Startup Funding Dropped By 29% In The First Half Of 2020

The Covid-19 economic impact and the lockdown restrictions drove capital inflow to all-time quarterly low in Q2 2020

DataLabs has recorded 69% decrease in the average ticket size of investment from Q1 2020 to Q2

The economic slowdown and recessionary conditions have shattered the expansion dreams of many Indian startups

The first half of 2020 ended on June 30 and it was perhaps the worst one for many investors and businesses. Startups, in particular, have been hit hard by the economic upheaval. Compared to the first quarter, the second quarter of 2020 witnessed a shattering decline of 74% in total startup funding in India. This is an indication of the devastating impact the pandemic had on the Indian startup economy.

The adverse impact of the pandemic was not limited to the funding rounds, the Indian startups also had to shed a large chunk of their workforce. The analysis by DataLabs by Inc42+ showed that Indian startups on an average fired 22% of their total employee count during the pandemic-induced lockdown adding more fuel to overall unemployment in India. If the adversity of the pandemic was not enough, India’s rising geopolitical tensions with China have made it more difficult to procure capital from Chinese origin investors, who were indeed an active participant in the ecosystem.

With so much happening around the world, the startup funding in H1 2020 closed at $5.2 Bn across 389 deals. The total capital inflow witnessed a decline of 29% compared to H2 2019 clubbed with all three major stages of funding growth stage, late stage and seed stage witnessing a negative growth of -52%, -21% and -3% respectively. The likes of few outliers such as OYOs’($806 Mn), RenNew Power ($450 Mn), FirstCry ($296 Mn) and others have boosted the aggregate value of the total funding in H1 2020. Removing such outliers (i.e. $200 Mn and above rounds) the total value of funding in H1 2020 stood at $3.2 Bn.

Despite such hardships, some startups aren’t failing to impress the investors. Fintech, edtech and consumer services are luring investors with the increased demand for their products and services in the post-pandemic world. Even at the seed stage, these three sectors have witnessed a rise in their deal count compared to H2 2019 — edtech (175%), fintech (26%) and consumer services (7%).