India sees venture capital investments surge to $8 billion in Q2: KPMG

Venture capital investments in India during second quarter (April to June) soared past the previous record high set in Q4 2019, driven not only by VC investors but also by more traditional funds feeling a sense of FOMO given the broad applicability of digital business models in the pandemic.

A diversity of companies are attracting VC investment in India, in particular those focused on direct-to-consumer offerings including e-commerce, food delivery, hyper-local grocery delivery, video sharing and gaming, said professional services firm KPMG.

Investors continued to pour money into edtech companies including BYJU which raised a 1.5 billion dollar funding round this quarter. Food delivery was also very hot in Q2 2021 led by Swiggy's 800 million dollar raise.

Nitish Poddar, Partner and National Leader for private equity at KPMG in India, said more and more tech enabled companies in India have been seen raising funds from capital markets.

"This opens a new avenue for early, mid and late stage financial sponsors to cash in on their investments. This is a significant shift from an exit route available to financial investors previously which will only increase the attractiveness of these businesses," he said.

Anand Vermani, Partner and Co-Head for corporate finance at KPMG in India, said VC deals count in India saw an unprecedented incline continuing the rally that began from the third quarter of 2020.

Major investments are chasing solutions that are built around financial services and delivery; cutting across businesses that offer on-demand financial support, B2B e-commerce, D2C, meals & grocery, supply chain & logistics, and mobility, he said.

"The advent of the so called traditional funds into this segment with large ticket investment lends a strong vote of confidence and validation to operating models of these new age businesses," said Vermani.

On the other hand, global VC investment rose from 147.2 billion dollars across 8,557 deals in Q1 2021 to 157.1 billion dollars across 7,687 deals in Q2 2021.

VC investment in Europe reached 34 billion dollars across 1,848 deals in Q2 2021 -- up from 23.9 billion dollars across 2,150 deals in Q1 2021.

The Asia Pacific region saw solid VC investment in H1 2021 despite a dip from 42.8 billion dollars across 2,066 deals in Q1 2021 to 38 billion dollars across 1,998 deals in Q2 2021.

Corporate investment was very robust in Q2 2-21 -- accounting for 73.9 billion dollars in investment. First time financings in first half of the year totalled 20.1 billion dollars -- well on track to exceed the peak high of 32 billion dollars seen in 2018.