Startups see 37% more first-time global backers

Source: ETRetail.com, Mar 16, 2021

Chennai: The success demonstrated by Indian startups in turning into unicorns (valued at $1 billion or more) and the massive global private equity investment drive in 2020 by Reliance Industries brought record global investor interest to the country’s startup ecosystem in the pandemic year.

Despite geopolitical tensions halting Chinese investment, around 59 international investors made their first-time PE-VC investment in India in 2020, according to data analysed by consulting firm Praxis Global Alliance. This is a 37% rise in the number of global first-time investors who invested in Indian startups, given that the corresponding number stood at 43 in 2019.

Not only did Indian startups attract more foreign investors, they also saw larger bets and raised greater capital for the ecosystem in 2020. The top 10 new global investors in 2020 participated in around $7 billion worth of deals, while this was only $1.2 billion in 2019, data showed. This includes co-investment by other players in the same deals.

There were sovereign funds like Saudi Arabia’s Public Investment Fund, which pooled almost $4 billion into RIL’s fund-raising for its group companies. Other instances of global firms tapping India included Luxor Capital Group’s investment in Zomato, Alkeon Capital’s backing of Byju’s, and South Korea’s NXC Corporation investing in DMI Finance.

International investment came in from over 15 countries. Of these, 60% investors had their headquarters in the US, followed by 7% who had their headquarters in Japan and South Korea each. The Middle East region was another major investor base. The investment deals by such first-time international backers were highest in consumer apps and platforms (14 deals) followed by Software-as-a-Service (SaaS) & Artificial Intelligence (AI) at 11 deals.

Praxis Global Alliance managing partner and CEO Madhur Singhal said Indian internet companies are scaling up rapidly, prompting global investors to participate in the ecosystem’s growth. “Also, many experienced India fund managers at global investment firms who understand the nuances of the startups here have turned entrepreneurs and set up their own funds,” he added.

As of December 2020, India was home to 37 unicorns with 14 companies making it to the elite list in the pandemic year alone.

44 startup unicorns created $106 billion in value

Source: LiveMint.com, Feb 23, 2021

New Delhi: Forty-four Indian tech unicorns have generated huge value for founders, employees, investors and the economy by creating $106 billion in value, resulting in direct and indirect employment of 1.4 million plus jobs annually.

Over the last decade, these unicorns with a valuation of over a billion dollars include MakeMyTrip, InMobi, Paytm, Byjus, Cars24, Ola and others have cumulatively created $106 billion value for the startup ecosystem, according to Indian Tech Unicorn Report 2020 by Orios Venture Partners, an early-stage venture capital fund.

While the financial payments sector saw the maximum number of unicorns, retail and SaaS (software as a service) were a close second, the report said. Other verticals include logistics, data analytics, travel, food and gaming.

In 2020, 12 startups including Razorpay, PineLabs, Zerodha and Postman, joined the coveted unicorn club, the highest ever in a year.

At $16 billion, Paytm continues to be the most valuable unicorn, followed by edtech startup Byju’s.

“…The Indian startup ecosystem has generated tremendous value for founders, employees, investors and the economy. Most of these are backed by technology and that is the key differentiating factor between unicorns of the 21st century versus the prior era,” said Rehan Yar Khan, managing partner, Orios Venture Partners.

Orios has invested in unicorns like Ola, Druva and Pharmeasy since their early days and look forward to being part of another 3-5 unicorns over the next few years, added Khan.

Interestingly, 41% of unicorns are from India’s startup capital Bengaluru, followed by Delhi at 34% and Mumbai at 14%.

“In fact, many former executives who have exited from these successful startups have continued onto their second ventures and have become angel investors of some repute bringing their experience and cheques to help grow the burgeoning ecosystem to help create the next unicorn,” said Ankur Pahwa, partner and national leader, e-commerce and consumer Internet, EY India.

The technology startup ecosystem continues to see a significant growth trajectory on the back of rapid digitalization and tech adoption.

“Startups are at the forefront of this widescale digital disruption. Segments such as edtech, healthtech, agritech, B2C (business-to-consumer) channels, social commerce, gaming and enterprise tech companies that are spurring the growth, are just few of the sub-segments witnessing double-digit growth and adoption and are expected to bring in the next wave of unicorns,” Pahwa said.

Startups in the country are also likely to see a rush of initial public offerings (IPOs) this year, aided by improving profitability and scale in various verticals.

While MakeMyTrip, JustDial and Naukri.com are the only unicorns to have been listed so far, multiple firms such as food delivery startup Zomato, logistics firm Delhivery, Walmart-owned Flipkart and e-tailer Nykaa are expected to enter the public market this year.

“E-commerce companies are also looking to go in for public listing (either India or overseas) to help tap into the interest and growth that they are generating, expect more news and traction regarding companies tapping into this funding channel in the next 12-24 months,” added Pahwa.

The average time period of eight years for a startup to become a unicorn is now reducing as availability of global investment and capital becomes more accessible, among other things, the report said.

Startups such Naukri.com, MakeMyTrip which were founded pre-2005, took over 14 years to achieve unicorn status, while Zomato, Flipkart and Policy Bazaar took around 8.7 years. Nykaa and Oyo have taken even less time at 5.8 years while Udaan and Ola Electric have taken only three years to achieve a valuation of over a billion dollars. Industry body Nasscom in January had said that at least 12 unicorns will be created in 2021.

Gaming startup MPL set to become next unicorn after $95 mn fundraise

Source: Business Standard, Feb 04, 2021

Bengaluru: Mobile Premier League, Asia’s largest e-sports and mobile gaming platform is now valued at $945 million after raising $95 million in a Series D round. The round was led by Composite Capital and Moore Strategic Ventures, with participation from Base Partners, RTP Global, SIG, Go-Ventures, Telstra Ventures, Founders Circle and Play Ventures.

The total capital raised by MPL since its inception in 2018 now stands at $225.5 million. The Bengaluru-based firm’s valuation had reached to about $450 million after raising $90 million from investors in last year in September, according to the sources.

MPL will use this fresh influx of funds to expand its esports portfolio and bolster its efforts to organize more such esports tournaments nationally and internationally at scale. The funds will also be used to accelerate MPL’s international expansion this year.

“As we grow our presence and expand, this fresh round of funds will help us focus on our core value propositions – a robust platform with the best features for gamers and onboarding the best esports titles,” said Sai Srinivas, co-founder, and chief executive of MPL. “The esports community in India is thriving, and we believe this is the perfect time to take Indian-made games to the world as well as help Indian gamers get recognized for their talent.”

The MPL gaming platform has over 60 million users in India and over 3.5 million users in Indonesia. With over 50 games across categories on its Android and iOS applications currently, MPL has worked with 28 game developers to publish their games on the platform and provide them with a new revenue stream.

“As an industry leader in the gaming market, we believe the company will continue to innovate and drive the evolution of esports, both in India and internationally,” said Kanush Chaudhary, managing director, Composite Capital.

The coronavirus pandemic-induced lockdown in 2020 provided a fillip to an already-booming esports industry in India and the world. MPL said it is at the forefront of democratizing esports in India and Indonesia, with initiatives such as the College Premier League (CPL), which was India’s biggest mobile esports festival. CPL saw participation from over 13,000 gamers and more than 100 colleges in India in November-December 2020, with Rs one crore in prizes and scholarships.

“As we double down on our investment in MPL, we are eager to see it increasing its international footprint and becoming a global leader in the mobile gaming and esports industries,” said Eduardo Latache, partner, Base Partners.

Last week, MPL also announced raising $500,000 from existing employees under its ’employee investment plan’ which saw participation from 10 per cent of the company’s employees.

“We are thrilled to have Composite Capital and Moore Strategic Ventures as new partners,” said Joe Wadakethalakal, senior vice president, corporate development and investor relations, MPL. “We look forward to working with them as we continue to build a global gaming business out of India.”

Earlier, MPL had signed Indian Cricket Captain Virat Kohli as its brand ambassador and sponsored two top Indian Premier League (IPL) teams – Kolkata Knight Riders and Royal Challengers Bangalore. It had also bagged the presenting sponsorship of reality TV show Bigg Boss, anchored by Bollywood superstar Salman Khan. With approximately 300 million gamers, India sits among the top five gaming markets globally. Further, there has already been a boost in online gaming in recent months, as a result of the impact of Covid-19 on society. With social distancing measures in place, telecommuting becoming the new norm, and physical sporting events remaining limited, e-sports and mobile gaming has received a boost.

Indian startups attract $10.14 bn in funding in 2020, says report

Source: Business Standard, Jan 26, 2021

New Delhi: Indian startups are estimated to have received USD 10.14 billion in funding across more than 1,200 deals in 2020 despite the COVID crisis, a report by consulting firm HexGn said.

Even though the total investment received in 2020 is lower than that of 2019 (USD 14.5 billion), the number of deals were higher by 20 per cent, the report said.

“Weathering negative sentiment, seed stage investment deals grew by 50 per cent from USD 353 million over 420 deals in 2019 to USD 372 million over 672 deals in 2020. This is a good sign for people looking to plunge into startups, as early-stage investors are now keen to back risk-takers early on,” the report noted.

This can be attributed to the work done by Invest India, Startup India, AgNii and other agencies of the Indian government to boost investor confidence and entrepreneurial culture, it added.

This is the third year in a row that India has kept its number four position globally after the US, China and the UK.

Globally, startups raised over USD 308 billion in funding, with the US garnering USD 165 billion.

The report said Bengaluru, Delhi NCR and Mumbai accounted for 90 per cent of the startup investments in the country, signalling concentration of angel investors and appetite in these regions.

Bengaluru led with USD 4.3 billion in startup investments, followed by Delhi NCR (USD 3 billion) and Mumbai (USD 2 billion).

In terms of sectors, e-commerce attracted the highest investment with USD 3 billion, followed by fintech at USD 2.37 billion and edtech at USD 1.52 billion.

The biggest gainer has been the edtech segment that grew four times this year from USD 380 million in 2019. However, sectors like transportation and logistics, and travel and tourism saw more than 90 per cent drop in investments in 2020 as compared to 2019, it added.

Startups that attracted maximum funding in 2020 include Zomato (USD 1.02 billion), Byju’s (USD 922 million), Phonepe (USD 807 million), Unacademy (USD 260 million) and Ecom Express (USD 250 million), as per the HexGn report. These numbers do not include funds raised by Jio Platforms (Rs 1.52 lakh crore) in 2020. The report noted that these numbers are early guidance and there could be changes as more companies make announcements on funds received.

Startups on new-age tech surge in India

Source: ETRetail.com, Jan 18, 2021

CHENNAI: A maturing ecosystem and tailwinds on the digital front due to Covid have expanded the ‘deep technology’ component of the Indian startup ecosystem. Deep tech includes the use of emerging and new-age tech such as AI, machine learning (ML), augmented & virtual reality, blockchain, robotics and 3D printing.

At 19%, now nearly one in five tech startups are leveraging deep-tech solutions for their businesses. The pool of deep-tech ventures is expanding at a fiveyear compounded annual growth rate (CAGR) of 41% — faster than the overall ecosystem, a study said.

Over 2,100 startups adopted deep technologies in their ventures as of 2020, up from the over 1,600 in 2019. Further, 14% of the total startup investments in 2020 were in deep-tech ventures, higher than the 11% in 2019. Up to 87% of these investments were in AI/ML startups in 2020. The Nasscom and Zinnov study further notes that deep tech will continue to grow at a CAGR of 40-45% in 2021.

Tech startups not just stayed afloat amid uncertainties but also converted the crisis into an opportunity, the report said. It noted that ‘digital maturity’ in the ecosystem jumped to 55% in 2020 from 34% in 2018. The acceleration in digital adoption brought about by Covid has resulted in “deep tech getting deep rooted into startups’ DNA”, the report added.

Jatin Desai, managing partner at Inflexor Ventures, a deep tech-focused VC firm, says they have observed a steady growth of such startups pitching to them for investments over three-four years, and anticipates this to continue into 2021.

“Over 50% of our current portfolio companies are deeptech startups,” he said. The country’s tech startup base is estimated to be growing at a scale of 8-10% year-on-year. Nasscom defines tech startups as active tech product or platform companies incepted in last five years.

PM Modi announces Rs 1,000 cr startup fund to push growth of tech ventures

Source: Business Standard, Jan 16, 2021

Bengaluru: Prime Minister Narendra Modi on Saturday launched a Rs 1,000 crore startup seed fund at ‘Prarambh: Startup India International Summit.’ This fund would help to launch and grow new-age ventures.

PM Modi said this fund is one of the initiatives that the country has started so that startups don’t face any capital crunch. Startups are already being helped to raise equity capital through the Fund of Funds scheme. Further, the government will also help startups raise debt capital through guarantees.

“India is trying to create a startup ecosystem which is based on the mantra ‘of the youth, by the youth, for the youth’,” said Modi. “For the next five years, we have a mission that our startups, unicorns emerge as global giants and lead in futuristic technologies.”

He said if such is the mission of all the countries of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), then a huge population would benefit from it. BIMSTEC is an international organisation of seven nations of South Asia and Southeast Asia, housing 1.5 billion people and having a combined gross domestic product of $3.5 trillion. The BIMSTEC member states include Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand.

“I am happy when I see and hear about the success stories of startups connected with BIMSTEC nations,” said Modi. “I am confident, we can together showcase the power of startups from this region to the whole world.”

Modi said there is a huge change in terms of how young ventures are perceived. Earlier, on hearing about a startup people used to ask ‘why don’t you do a job?’. However now people say ‘why not create your own startup’. He said these changes are a major strength of BIMSTEC countries.

He said this is the century of the digital revolution and new-age innovations and this century is also called the century of Asia. And therefore, it is the need of the hour that the future technology emerges from the labs of Asia and entrepreneurs from this region. For this, the countries of Asia will have to come forward and take responsibility, who can work together and for each other and have a sense of cooperation. He said the responsibility falls to the BIMSTEC countries. This is because centuries-old relationships, culture, civilisation, and common heritage of relationships have kept these nations together.

These collaborations would support startups and be beneficial for all the sector. Sharing the 5-year experience of how young ventures have evolved in the country, Modi said India today is one of the largest startup ecosystems in the world. The country has more than 41,000 startups working on different missions. There are nearly 5,700 startups in the IT sector, 3,600 in the health sector, and 1,700 in the agriculture sector. He said these firms are changing the demographic character of business. In 2014, there were only 4 startups in the unicorn club in the country. But today more than 30 ventures have crossed the $1 billion valuation mark. “You would be surprised to know that, 11 startups have joined the unicorn club in the year 2020, amid the difficult year of the coronavirus pandemic,” said Modi.

He said the country started the ‘AatmaNirbhar Bharat’ (‘self-reliant India) campaign at a difficult time of the pandemic. And the small ventures are also playing a big role in this.

“During the pandemic, when the world’s big companies were struggling for their survival, a new army of startups was coming up in India,” said Modi.

These firms played a big role in the country, from addressing needs ranging from providing sanitisers, PPE (personal protective equipment) kits to building the supply chain. They catered to the local needs such as delivering kitchen essentials and medicines to the customers, providing transportation to frontline workers, and preparing online study materials for students. “These startups discovered opportunity in disaster and also built confidence amid calamity.”

Today, the success stories of new ventures are not limited to big cities. Many of them come from small cities and towns such as Lucknow, Bhopal, Sonepat, Kochi, and Thiruvanthapuram. He said about 80 per cent of the districts of India have joined the startup movement. Around 45 per cent of startups, today come from tier-2 and tier-3 cities, acting as brand ambassadors for local products.

Also, there is a huge awareness among people related to health and consuming healthy food. He said special growth is being given to the growth of the food and agriculture sectors in India. The country has also created an ‘Agri Infra Fund’ of Rs 1 lakh crore to modernize the infrastructure related to agriculture. This has opened up new avenues for small companies. Today these firms are collaborating with farmers. Startups are also playing their role in delivering food products from farm to table, with better quality.

He said whenever a new challenge comes in any field, startups come forward and say that they will solve those challenges. India is also working with this startup spirit today.

“Today, the country says that ‘we will do it’,” said Modi. “Be it digital payments, the solar energy sector, or AI (artificial intelligence) revolution.”

For instance, the transactions on the UPI (unified payments interface) platform amounted to over Rs 4 lakh crore in December 2020. India is moving towards leading the world in the solar sector. According to a recent study, the use of AI in India has also increased very fast compared to the big countries of the world.

Modi also said that small firms are getting the opportunity at par with large businesses in government tenders on the GeM (Government e-Marketplace) portal. Till now, nearly 8,000 startups have registered on the GeM portal and carried out business worth about Rs 2,300 crore. He said that the total business through GeM portal is touching nearly Rs 80,000 crore. “In the future, the share of startups in this would increase.”

India added 1,600 tech start-up, 12 unicorns in 2020: Nasscom report

Source: Business Standard, Jan 07, 2021

Bengaluru: As India moves towards becoming a digital economy, the technology start-up ecosystem continues to witness a significant growth trajectory on the back of rapid digitalisation and tech adoption.

A Nasscom and Zinnov report says over 1,600 tech start-ups were added to the ecosystem last year with a record number of 12 new unicorns – the highest ever added in a single calendar year. The Indian tech start-up base is witnessing a steady growth at a scale of 8-10 per cent yoy, according to the report titled Indian Tech Start-up Ecosystem – On the March to Trillion Dollar Digital Economy. Indian start-ups not only managed to stay afloat amidst uncertainties and rapid experimentations after the pandemic outbreak, but also strategically strengthened their playbook by converting the crisis into opportunity. Depending on headwinds, 2021 promises to be a positive year for Indian tech start-ups – marching steadily towards a trillion-dollar digital economy goal.

Growth-stage startups get biggest VC deals

Source: LiveMint.com, Jan 05, 2021

India is one of the biggest recipients of venture capital (VC) in the world. Between 2004 and 2016 alone, the country got over $9.5 billion in VC investment, according to a new study.

Various factors affect how much a venture capitalist invests in a startup, but the study finds that the biggest determinants are the stage of investment and size of stake to be acquired.

The study, by Richa Gupta and Abha Shukla of the Delhi School of Economics, is based on data on around 2,700 VC transactions in India from 2004 to 2016.

Startups in the ‘growth stage’—five to 10 years old and in their first to fourth round of funding—receive investments of $6.8 million on average. This is over three times the investment of an average ‘early-stage’ startup, which is under five years old and in its first or second round of funding.

The reason is that early-stage startups are more of a risk for investors compared to growth-stage ones for which there is more information available to judge their track record.

Another factor affecting deal size is the size of the stake VCs acquire in return for investment. A 1% increase in stake in a startup increases VC funding by 0.7%, the authors find. On average, VCs acquire a quarter of a startup’s stake and get a say in how it is run.

The type of VC investor also affects the size of investment. There are three types of investors—funds dedicated to India, foreign funds without an India focus, and co-investment funds involving both. The average investment by an India-focused fund is $3.2 million. The study says the amount invested by a co-investment fund will be twice that of an India-focused fund, while that by a foreign fund will be 75% more.

MANAGE offers ₹4-crore grant for agri start-ups

Source: The Hindu Business Line, Dec 08, 2020

Hyderabad: The National Institute of Agricultural Extension Management (MANAGE) has announced a financial support of ₹4 crore to about 40 agricultural start-ups.

The grant-in-aid is being given under the Rashtriya Krishi Vikas Yojana – Remunerative Approaches for Agriculture and Allied Sector Rejuvenation (RKVY-RAFTAAR)’s Innovation and Agri-entrepreneurship Development.

“The aim of this programme is to promote innovation and agripreneurship by providing financial support and nurturing the incubation ecosystem,” a MANAGE spokesperson said.

The start-ups cover a wide range of areas such as agro-processing, food technology, value addition, artificial intelligence, Internet of Things, digital agriculture and organic farming.

“These start-ups are addressing several challenges faced across the agricultural value chain. These start-ups have emerged as a missing link between the farmers, input dealers, wholesalers, retailers and consumers,” he said. The short-listed start-ups were trained for two months at the Centre for Innovation and Agripreneurship (CIA) at MAANGE in various aspects of running the businesses.

“Start-ups are frontrunners and innovative enthusiasts bringing in the transformation in the agriculture sector,” P Chandra Shekara, Director General of MANAGE, said.

Investors now can’t seem to get enough of fresh food startups

Source: ETRetail.com, Oct 27, 2020

There’s been a spike in sales and investor interest for businesses in the fresh food space such as FreshToHome, Country Delight, Gourmet Garden, and Licious, which focus on superior quality produce at source and customise their supply chain operations.

What’s luring investors is the intellectual property these companies have created in their sourcing and production methods, supply prediction algorithms and high repeats of the top 1% customers, leading to both social impact and better business economics. The pandemic has led Indian consumers to opt for better quality and safer food products.

“Fresh foods, milk and meats are a large market with very little segmentation on quality and price. Hence, there is an opportunity to have different product quality and price segments,” said Anup Jain, a partner at Orios Venture Partners. “There is also an increased realisation in the Indian urban consumers esp in the the top tier cities where affordability is higher, that products they consume daily are not ” fresh and pure” as they claim to be,” he said.

Country Delight, which sells milk, is in talks to raise $18 million led by Elevation Capital (formerly known as SAIF Partners), according to people familiar with the matter. The business focuses on superior quality milk by working directly with dairy farmers. At a scale of about Rs 32 crore a month, it operates at 45% gross margins. Akshayakalpa Organic Milk is growing 6-8% every month and became operationally profitable after closing Rs 60 crore in its top line last year.

FreshToHome has grown over fourfold in the past 12 months, generating 1.5 million orders per month, while Licious said it delivers 1 million orders a month with an average basket size of Rs 700, a 30% jump over the pre-Covid-19 era. Gourmet Garden said over 70% of its revenue comes from 17,000 households that are repeat customers every month.

“While most organised plays in F&V have gone after ‘making supply chain efficient’ by cutting through several middlemen to go as directly to the farmer as possible, the core customer need of quality and safety is still not addressed,” said Arjun Balaji, cofounder of Gourmet Garden.

Gourmet Garden has invested in research to develop soil-less, zero-pesticide farming – what it calls its naturoponic technique – as the answer to growing perishable veggies sustainably and get better quality produce at source. The company also has a local farm model that allows harvesting on the day orders are received.

Consumer needs have shifted dramatically in the past decade with them now demanding fresher, traceably safer, and nutritious produce. “The pandemic propelled the demand for high quality, safe, hygienic meat. All our product categories have seen growth. For example, the ready to cook segment like kebabs and pre-marinated meats and seafood saw a 3X in sales volume,” said Vivek Gupta, cofounder of Licious.

These businesses are also investing heavily in technology and supply chain capability to get products across to consumers faster than traditional channels.

Shan Kadavil, CEO at FreshToHome, explained that a typical fish supply chain in India has over three middlemen and it takes 3-4 days to reach the customer.

“Our platform ensures that the sellers are able to source without middlemen and the product reaches the end consumer within 24-36 hours,” said Kadavil. The platform’s wastage is 1.5%, while traditional grocery in fish and meat has wastage of about 15%. ET reported that FreshToHome is in talks to raise about $130 million.

Each of these businesses is investing to ensure quality produce. Akshayakalpa, based in Tiptur, Karnataka, has invested in automatic milking systems, a biogas plant, a bio-digester, fodder choppers and a chilling unit among other facilities that ensure quality and enhance productivity. Country Delight and Parag Milk Foods also follow similar models of pasteurising, testing and delivering milk.