Deals in growth-stage startup space climb  to  a  record  $3.1 billion in 2019

Source:  Livemint.com, Jan 14, 2020

Investments in growth-stage startups touched a record $3.16 billion across 189 rounds in 2019, marginally up from last year’s $2.92 billion, data from Venture Intelligence showed. In contrast, growth-stage funding had doubled in 2018 from the previous year.

The year saw far larger deal size than earlier, including Series B and C rounds worth $75-150 million each.

That apart, big-ticket investors, such as private equity firms, also started participating in early investments in startups.

“A lot of private equity investors are getting interested in tech-enabled businesses, given that some of the survivors from the 2015 cohort have delivered on strong economics and growth,” said Shivakumar Ramaswami, founder, Indigoedge, a startups-focused investment banking firm.

Some of the largest growth-stage fundraises in 2019 included scooter rental firm Bounce raising $72 million (Series C); credit card startup Cred raising $120 million (Series B); MyGate, which provides security management for gated communities, raising $56 million (Series B); and real estate platform NoBroker securing $51 million (Series C).

Startup funding is expected to be tight in 2020, after the poor listings of Uber and Lyft in the US, and WeWork’s initial public offer (IPO) meltdown, where its listing plans were canned and its value was reduced by 80% within a few weeks.

Startups are also hitting the market earlier to beat the shifting investor sentiment.

“We are seeing a lot of firms trying to raise money prematurely, owing to the expectation of the market slowing down. This happens at the end of every cycle. Given this context, the companies need to be more sensible with their ask and ensure they are well capitalized rather than optimizing for price,” said Ramaswami.

Growth-stage startup funding is also buoyant given the entry of more domestic investors, indicating permanent capital, rather than foreign funds that fly in and out, and write cheques every few months.

Mint reported on 15 April last year that venture capital (VC) investors are increasingly participating in mid-stage (Series B-C) rounds, attracted by more opportunities and lower competition.

While there are dozens of dedicated seed-stage funds and a handful of late-stage investors, mid-stage has not seen dedicated pools of capital. Investors such as A91 Partners, Korea’s Mirae Global Asset Management and Iron Pillar have now targeted the mid-stage exclusively.

“Even foreign funds such as Tiger Global Management and Steadview Capital have hired people locally, to have their ears to the ground, and indicating a longer term view,” said an investor who has worked with the two funds, requesting anonymity.

Japan’s SoftBank Group, famous for writing large cheques to late-stage technology firms at huge valuations, is also changing its strategy.

It is looking at growth-stage firms, as early as Series C, and wants to write cheques from $100 million onwards in promising companies, Mint had reported last June.

Growth-stage also contributed to the overall venture capital funding numbers, which also hit a record high of $10 billion in 2019, breaching two previous records—$9.6 billion and $9.1 billion in 2018 and 2017, respectively.

The rise of business-to-business (B2B) startups, across sectors, from e-commerce to fintech and software, was also a large investing theme. Out of the $10 billion, B2B firms raised $4 billion, the highest-ever percentage at 40%, rising from the 25% last year. In 2018, B2B firms had raised $2.3 billion out of the total $9.6 billion.

Bengaluru start-ups get the most funding

Source: LiveMint.com, Jan 03, 2020

NEW DELHI: Eight startups became unicorns in the first nine months of the previous year, including BigBasket, Delhivery, Ola Electric, US-based SaaS firm Druva Software, US-headquartered Cloud-based software developer Icertis Software, gaming startup Dream11, healthcare startup CitiusTech and logistics startup Rivigo.

According to data by YourStory Research on Indian startup ecosystem and January-September 2019 funding, investors expect India’s next batch of unicorns to emerge from the pool of B2B startups, building global solutions and attracting marquee investors like Tiger Global due to their scalability and market opportunity.

As per YourStory Research, Oyo is the top acquirer by M&A deal size, while Reliance Industries is the top acquirer by M&A deal volume. Read the rest of this entry »

Indian start-ups raised a record $14.5 bn in 1185 funding rounds this year

Source: Business Standard, Dec 27, 2019

Bengaluru: As the decade is coming to an end, it has seen an impressive 25x growth from a tiny $550 million in 2010 to $14.5 billion in 2019 in terms of the total funding raised by the start-ups.

This year start-ups raised $14.5 billion in 1185 funding rounds out of which 459 were Series A and late-stage investments, according to the ‘India Tech Annual Factsheet – 2019’ compiled by data analytics firm Tracxn. This is a significant jump from $10.5 billion raised by young ventures in 2018 and $10.4 billion in 2017.

There are 24 ‘unicorns’ or startups valued at more than $1 billion (each) and 155 ‘soonicorns’ or firms which hold the potential to become unicorns in the near future in the country. Out of these 9 ‘unicorns’ and 60 ‘soonicorns’ were formed this year, according to Tracxn. The latest entrants into the unicorn club included Bengaluru-based online grocery retailer BigBasket, Gurugram-based logistics startup Delhivery and Delhi-based eye-wear firm Lenskart whose valuation recently crossed $1.5 billion with the SoftBank deal.

This year Masayoshi Son-led SoftBank made massive investments in the Indian startups.

The biggest funding round was raised by Gurugram-based hospitality firm Oyo Rooms which received $1.5 billion in Series F financing led by investors such as SoftBank, Sequoia and Lightspeed Venture Partners. Across the city, SoftBank along with investors like Ant Financial and Discovery Capital also invested $1 billion in digital payments company Paytm.

The Noida-based firm competes with Google Pay, Amazon Pay and Walmart-owned PhonePe to tap the booming digital payments market in the country.

Business to business e-commerce, logistics and mobility companies also attracted a lot of capital from investors. This year, Delhivery secured $413 million in a funding round led by SoftBank Vision Fund. SoftBank also pumped in $250 million in Ola Electric, the Bengaluru-based ride-hailing firm’s electric vehicle arm. The deal turned the company into a ‘unicorn’ almost overnight. Another Bengaluru-based firm Udaan, a business-to-business e-commerce platform raised $585 million in Series D financing round led by China’s Tencent, giving the firm a “post-money valuation in the range of $2.5 billion.

Read the rest of this entry »

Start-up funding slows down in 2019 after a two-fold surge previous year

Source: Business Standard, Dec 25, 2019

Chennai: After recording a surge of over 100 per cent in start-up funding in 2018, the year 2019 ended with a mere two per cent growth in value terms, even as the number of deals dropped.

According to Venture Intelligence data, venture capital investments in India stood at $8.9 billion across 656 deals in 2019 as compared to $8.7 billion in 2018 across 664 deals. The 2018 figure was higher by 102 per cent compared to 2017, when VC firms pumped in $4.3 billion across 623 deals.

The term venture capital embraces all investments from seed capital to Series-F funding in companies less than ten years old.

The IT & ITeS sector continues to drive investments, followed by BFSI, Logistics, travel and transport, and health care.

Sequoia remains the most active VC investor, followed by Accel, Tiger Global (which stepped up investments big time from eight deals in 2018 to 27 deals in 2019), Blume Ventures and Matrix.

Major deals include the $586 million investment by Tencent, GGV Capital, Altimeter Capital, Hillhouse Capital, DST Global, Lightspeed Ventures, and others in Udaan in August, followed by $413 million by SoftBank Corp, Carlyle, Fosun Group in Delhivery. Soft Bank invested another $650 million in two companies — $400 million in FirstCry and and $250 million in Ola Electric. It also participated in the $220 million funding of Grofers along with Tiger Global, Sequoia Capital India and KTB Ventures.Among cities, Bengaluru continues to top the table, followed by NCR Delhi, Mumbai, Pune, Chennai and Hyderabad.

Tech startups created over 60,000 direct jobs this year, says Nasscom

Source: Business Standard, Dec 18, 2019

New Delhi: Technology startups alone have created 60,000 direct jobs this year and overall the IT sector will be a “positive hirer” in the current financial year, industry body Nasscom said on Wednesday.

Speaking at the launch of ‘Future Skills PRIME’ programme, a joint skilling initiative by the IT ministry and industry association, Debjani Ghosh, President of Nasscom said, “Even our startups are creating jobs, tech startups have created over 60,000 direct jobs… just this year”.

IT Minister Ravi Shankar Prasad said that as per Nasscom, the top IT companies have continued hiring momentum. Read the rest of this entry »

WhatsApp set to invest $250,000 into India’s start-up ecosystem

Source: Business Standard, Nov 25, 2019

New Delhi: WhatsApp on Monday said it would invest $250,000 into the start-up ecosystem in India through a partnership with Startup India, taking its total investment in start-ups in the country to $500,000.

The Facebook-owned messaging platform will provide 500 start-ups approved by the Department for Promotion of Industry and Internal Trade (DPIIT) with $500 each of Facebook ad credits. With the ad credits, the start-ups can create ads that invite customers to click open a chat on WhatsApp so they can deepen connections and increase sales.

In order to be eligible for this incentive, start-ups should be at an early traction or scalable stage and must be recognised by the DPIIT. Interested start-ups can apply through Startup India’s website and selection would be on a first-come-first-serve basis. Once registered, the first 500 entries will receive free Facebook ad credits worth $500.

This investment comes on the heels of the Startup India-WhatsApp Grand Challenge held in June, which had entrepreneurs develop India-specific solutions with socio-economic impact. At the time, WhatsApp awarded the five winners of the challenge with a grant worth $50,000 each (about Rs 35 lakhs), or $250,000 in total.

Paytm gets $1 billion topup in latest financing round

Source: The Economic Times, Nov 25, 2019

BENGALURU: Digital payments company Paytm said it has raised $1 billion in a financing round led by US asset manager T Rowe Price with existing investors Ant Financial and SoftBank Vision Fund also participating.

This is the largest amount raised by an Indian startup this year. The company said this values it at close to $16 billion. Discovery Capital, an existing shareholder in the Noida-headquartered firm, also took part in the latest funding round.

“It’s a $1 billion raise led by T Rowe Price,” said Vijay Shekhar Sharma, CEO of One97 Communications, Paytm’s parent. “SoftBank has pumped in $200 million while Ant Financial has invested $400 million at a $16 billion valuation.”

This takes the total investment raised by the company to about $3.5 billion. ET was the first report on T Rowe Price leading the latest funding round at Paytm on October 15.

This is a rare bet for T Rowe Price, which manages more than $1 trillion in assets, on a privately held Indian technology startup, after its investment in Flipkart, owned by Walmart.

CEO Sharma dismisses threats from rivalsWhen contacted by ET, a spokesperson for T Rowe Price said, “We don’t have a comment for that.”

An Alipay media representative said, “Please note we don’t have much to add and you may want to refer to Paytm’s press release for details.” A SoftBank spokesperson declined to comment.

Paytm had last raised $300 million from Warren Buffett’s Berkshire Hathaway in September 2018, valuing the company at $10 billion. This is the first primary investment round since then. However, over the course of this year, the company has cashed out employee stock options at a $16 billion valuation.

“This new investment by our current and new investors is a reaffirmation of our commitment to serve Indians with new-age financial services,” Sharma said. Over the course of the next three years, Paytm will invest Rs 10,000 crore to acquire customers and merchants in smaller towns, and online merchants. “The primary intention is to become more inclusion-centric and provide financial services for the underserved and unserved by leveraging technology as a distribution platform,” he told ET.

Sharma stressed that certain businesses within Paytm, including payments and ticketing, are in the process of breaking even and the company is investing in newer business lines such as financial services and insurance, among others.

‘BUSINESS MATURE NOW’“Our payment business is fairly mature now and is contribution breakeven, while commerce verticals are making some money,” he said.

Earlier this year, Paytm began fundraising efforts to pick up close to $2 billion but trimmed the size of the round amid heated competition and widening losses in the digital payments segment. Walmartowned PhonePe, which has been looking to spin itself off as a separate entity and raise external capital, has not closed a round as yet.

Sharma dismissed threats from the likes of GooglePay, Amazon-Pay and PhonePe.

“We have been the majority market shareholder of offline and online merchants,” he said. “These people have been spending billions of dollars in the last two-three years but couldn’t even touch our payments business. We have been successful in not just protecting but increasing our market leadership.”

ET reported on November 14 that Paytm’s existing investors such as SoftBank imposed new conditions on the company before investing in this funding round. The Japanese group has stipulated that the company should go public within five years from the time of completion of the transaction, failing which SoftBank will have the right to sell its stake to a rival company, sources had told ET. SoftBank, which first invested in the company in 2017, holds a 19% stake, while the Alibaba Group, through Ant Financial and directly, owns 38% in Paytm.

One97 Communications posted Rs 3,959.6 crore net loss in FY19 against Rs 1,490 crore a year earlier, according to details the company shared with investors, ET reported in September. Its standalone revenue rose marginally to Rs 3,319 crore from Rs 3,229 crore in FY18. The losses its competitors posted have been equally steep. Phone-Pe’s losses amounted to Rs 1,904.72 crore with revenue from operations at Rs 184 crore while Amazon Pay reported a loss of Rs 1,160.8 crore for FY19.