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Indian Startup Funding Recovers In Q3 2020 After 74% Decline In The Previous Quarter

Indian Startup Funding Recovers In Q3 2020 After 74% Decline In The Previous Quarter

A total of $2.8 Bn was raised across 261 funding deals in Q3 2020, with deal count rising by 46%

The funding amount and deals in Q3 2020 remained relatively low on a year-on-year basis, but the funding amount in Q3 2020 surged 167% compared to Q2

Recovery can largely be attributed to funding in enterprise tech, edtech, and fintech, but the total funding in Q3 2020 remains lowest for the third quarter in the past three years

The sudden imposition of the lockdown and mass social hysteria among consumers left millions of businesses reeling in the past six months, leaving a $320 Bn dent on the Indian economy. In the context of the Indian startup ecosystem, this market uncertainty made investors wary about making new investments in startups. The widespread cash crunch and cost-cutting measures to extend runways led to massive layoffs at Indian startups.

As people adapted to the new normal, however, so did the Indian startup ecosystem. Compared to Q2 2020, both the funding amount and deal count recovered by 167% and 46% respectively. However, the funding amount still remains 32% lower compared to Q1 2020, whereas the deal count was 25% higher in Q1.

The recovery in this quarter can largely be attributed to sectors such as enterprise tech, media & entertainment and fintech which combined accounted for 58% of the total $2.8 Bn funding and 39% of the total deal count (261).

When compared to Q3 2019, both the funding amount and deals in Q3 2020 remained relatively low, indicating the adverse impact of the pandemic on startup investments in 2020.

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