Cash-rich: Funding flows in fast for start-ups; $12.1-billion investment by VCs in first 6 months of year

Ola just bagged a big $500 million from investors. Earlier in the week, Social commerce start-up DealShare closed a chunky $144-million funding round led by Tiger Global, while fintech player Pine Labs raised a fresh $315 million from a clutch of investors. Indian start-ups seem to be on a fundraising spree; faster adoption of technology in a Covid-hit world has nudged a slew of investors to back internet firms.

In fact, data sourced from market research firm Venture Intelligence revealed that VC (venture capital) investment in start-ups touched a whopping $12.1 billion in the first six months of the year alone.

This compares to just a little over $5 billion that companies managed to garner during the January-June period last year. The space added as many as 16 unicorns across segments so far this year against about 11 unicorns it added in the whole of 2020.

Sequoia Capital India, Tiger Global and Accel India led the bulk of the VC investments, data showed. But it is not just in terms of funding that 2021 is unfolding to be a year for start-ups. The segment is also bustling with some significant M&A (merger and acquisitions) deals and proposed IPO (initial public offering) launches. Newly-minted unicorn PharmEasy recently acquired a majority stake in diagnostic chain Thyrocare for Rs 4,546 crore.

Byju’s, however, walked away with one of the biggest M&A deals in the space with its acquisition of Aakash Educational Services in a near $1-billion transaction. New unicorn in the making upGrad has earmarked $250 million for M&A deals.

Flush with capital and having reached a certain scale, a bunch of established start-ups are gearing up to get listed in the coming months with Zomato leading the race. The food tech firm is set to open its Rs 9,375-crore IPO for subscription on July 14. Vijay Shekhar Sharma-led Paytm is aiming to go public around November. “I strongly believe that Indian startups do not need to look out to other countries for growth. There is a tremendous amount of market depth in India,” Zomato founder and CEO Deepinder Goyal had said last year.

Analysts say international markets will be the next growth frontiers for many start-ups. Once companies are able to scale up their operations in the top 20-30 Indian cities, the opportunities for growth get restricted. The flow of funding is expected to remain intact as emerging breed of investors like limited partners and micro VCs get more active. A separate report issued by Praxis Global Alliance estimates Indian ultra-high net worth individuals to pump in about $30 billion in tech start-ups by 2025.