At the height of the pandemic around March last year many founders and investors were worried about the impact the virus would have on the Indian startup scene. With increased infection rates and extended lockdowns, the startup ecosystem was feeling the real effects of the pandemic.
Startup stakeholders even penned a joint open letter to everyone in their ecosystem to “prepare for the worst.”
And they were right. In the months that followed the virus spread to various South Asian markets and startups were feeling the effects. Some began cutting expenses while others just couldn’t survive and folded soon after. It was a bloodbath as far as startups, their founders and investors were concerned.
However, no one was quite prepared for the change in fortunes that would come just after.
A number of startups started reporting high growth rates, faster than most had ever experienced in their total existence.
“We started to see three years and five years of growth in one year,” said Ashish Dave, chief executive of Mirae Asset Ventures in an interview on Techcrunch.
Last year saw the minting of more than 44 unicorns (start-ups valued at more than $1 billion) with more than $35 billion pumped into them by various investors. This is triple the amount invested in India just the previous year, quite an impressive feat considering that a similar large market in the name of China is currently experiencing a downturn in investment.
Analysis by Global Data shows a drop from $73 billion to $54.5 billion in China. This was in part due to enforced crackdowns on Chinese start-ups by their authorities, making it difficult for foreign investment into China.
Talking to The National NewsSiddarth Mehta, founder of investment firm Bay Capital Partners said:
“India really is that final frontier where businesses can attract a sixth of the world’s population. I think India is about 13 to 14 years behind China in terms of the size and scale of the market. India’s overall digital marketplace is about sub-$100bn today, but that number can easily be a trillion or $2 trillion over the next 10 to 15 years.”
India now has an impressive 81 unicorns, 44 of which were minted just last year. Even I who covered this phenomenon earlier last year was a little sceptical about this trend seeing it as just a blip in an otherwise boring market.
But boy was I wrong, it just kept raining unicorns all year round. Adding to eight start-ups who attained unicorn status in April in the likes of fintech CRED, social commerce Meesho, payment firm Chargebee and others, there were many more who joined the unicorn club later in the year. This includes the likes of Questbook which is helping developers transition to web3 and Polygon.
What was predicted to be a gloomy year for Indian start-ups instead became a boom year. But what really propelled these start-ups to the new league?
One answer lies in the investors who are after all responsible for these ever-growing valuations. And by investors, I mean specifically Tiger Global.
The New York investment firm has infused over around $2.25 billion in investment into India in 2021 making it the top investor over the last few years according to research done by Venture Intelligence.
Data from the research showed that Tiger Global was the leader in at least 19 of 42 of the largest funding rounds that led to the birth of unicorns in 2021. Such unicorns include Slice, No Broker, Apna, Blackbux, Grofers, Urban Company, Vedantu, Spinny, Bharatpe and many more.
Tiger Global is however not top in the number of deals made in 2021. That position belongs to California-headquartered Sequoia Capital who participated in a whopping 102 funding rounds. They were followed by Tiger Global who made 56 deals. Other VC firms worth mentioning (according to the number of deals made) include Accel India, Matrix Partners and Blume Ventures.
When comparing capital, however, Tiger Global’s $ 2.25 billion is easily the highest. This is followed a little closer by Japanese tech investment Softbank who invested a whopping $1.57 billion into Indian start-ups last year.
Softbank’s bets include Zeta, Meesho Eruditus and MindTickle.
Other VCs worthy mentioning in this list include Falcon Edge capital ($1.12 billion), followed by Prosus Ventures ($925 million) and Temasek ($909 million), as per VC data.
Cumulatively, Indian startups raised more than $34 billion in investments last year, this was a 200 per cent YOY increase when compared to $11.2 billion investments raised in 2020.
With 2021 proving to be quite a successful year for the Indian start-up scene it will be interesting what 2022 has in store. I just hope the unicorns just keep coming.
[…] And who can blame them, over the last two years “venture capitalists passed around multimillion-dollar deals like canapés at a cocktail party.” Huge investment firms like Tiger Global have been closing deals worth billions of dollars over the last few months. In India, for instance, the firm has been really aggressive with its investments closing more than 25 deals by April this year. These were massive deals that averagely ranged from $10 million to $100 million. Tiger is also an investor in over 20 of 47 Indian unicorns. […]