Indian startup funding crosses $10 bn in Q3, first time in any quarter: PwC

The fund raise was twice the amount of funding received in Q3CY20 and an increase of 41% over the Q2CY21 figure

Indian startups have got record funding in Q3 of CY21, with investment totalling $10.9 billion across 347 deals--the first-time investments in a quarter have crossed the $10 billion mark, as per the PwC India. This was twice the amount of funding received in Q3CY20 and was up about 41% over the Q2CY21 figure, said the findings of the report titled 'Startup Perspectives-Q3CY21'.

The increase in funding activity was noted across all sectors, both by value and volume.

However, fintech, edtech and SaaS are the top three hot investment sectors in CY21, together accounting for about 47 per cent of the total funding activity. The fintech sector saw a four-fold increase in funds raised in the first three quarters of CY21, over the first three quarters of CY20. Six fintech companies attained unicorn status.

Discussing the investment in startups 2021 thus far, Amit Nawka, Partner–Deals & Startups Leader, PwC India, said, “Start-ups have leveraged the accelerated digital adoption seen amongst businesses and individuals alike to create newer business models and this is driving investor interest in a big way. We are seeing the average deal size increase and quicker funding rounds which has led to a surge in deal activity across sectors, since early this year.”

 

Startup Perspectives for Q3 of CY21: A snapshot                                                                                                                                                                                                              

• Fintech investments: FinTech investments in India in CY21 have grown exponentially. In the first three quarters of 2021 investments worth $4.6 billion in the FinTech space were recorded, up approximately 3x from $1.6 billion in 2020.
• Investments worth $2.5 billion for 53 closed deals were recorded in Q3 of CY21 alone across various stages of investment. The FinTech ecosystem saw investments across the spectrum of business with investors showing a renewed interest in companies operating in the segments of InsurTech, WealthTech, neobanks and financial technology enablers.
• Stages of funding: Approximately 84 per cent of the funding activity was driven by growth- and late-stage deals. However, these represented approximately 39 per cent of the total deal activity (count terms). Around 61 per cent of the total deal activity consisted of early-stage funding rounds for $1.6 billion (average ticket size per round $4 million) early stage/seed companies.
• Pre-IPO round raised for $880 million in CY21 by companies nearing IPO--Ola cabs, Droom, Pine Labs.
• City-based funding activity: Bengaluru and NCR continue to be the key start-up cities in India, together contributing around 76–78 per cent of the total funding activity in the first three quarters of both CY20 and CY21, followed by Mumbai and Pune.
• Global and Indian unicorns: A total of 114 private start-ups (globally) became unicorns in CY20. The number increased drastically in 2021 as 371 start-ups have already become unicorns in the first three quarters of CY21. Geographically, maximum unicorns in Q3CY21 have come from the US, with India in the second position. FinTech and SaaS are the most represented sectors in Q3CY21 both globally and in India.
• Three decacorns (privately held startups valued at over $10 billion) were added in 2021, all from China and Hong Kong. As of now, India has two decacorns (Paytm and Byju’s).