Startup funding down 29% in first half of 2020 amid Covid-19 crisis: Tracxn

Startup funding activity decreased by 29 per cent in the first six month of this year to $4.2 billion compared to $5.9 billion in the same period last year, due to the impact created by the coronavirus pandemic, according to data analytics firm Tracxn. Only 443 companies were funded in the January-June period this year against 725 in H1, 2019, according to ‘India Tech Semi-Annual Factsheet’, compiled by Tracxn.

In the same period, three unicorns or startups valued at more than $1 billion (each) emerged compared to six last year. These were kids and baby products online retailer FirstCry, fintech company Pine Labs and online beauty and wellness retailer Nykaa. Also, there were 17 soonicorns or companies which hold the potential to become a unicorn in the near future against 28 last year. 

Some startups managed to raise huge funding, even as the economic situation was worsening. This includes edtech company Byju’s raising $300 million from Tiger Global Management and $200 million from General Atlantic.FirstCry received $300 million from SoftBank Vision Fund. Another edtech company Unacademy raised $110 million from investors including Facebook and scooter-sharing firm Bounce received $105 funding.

 

Tracxn report said alternative lending and test preparation tech were the most popular business models(BMs) of H1 2020. These generated the most interest, as indicated by the funding that went into them, accompanied by the percentage change in funding when compared to H1 2019. 

Byju’s, Unacademy and Vedantu received most of the funding in the test preparation technology space. This area saw a major spike in funding with companies in this space raising a total of $666.2 million, up 538 per cent, according to Tracxn. 

Byju’s recently crossed $10.5 billion valuation after raising new funding of less than $100 million from Silicon Valley investor and analyst Mary Meeker's Bond Capital. It is rapidly narrowing the gap to become the most valuable startup in the country after digital payments firms Paytm, which is valued at around $16 billion.

 

In the lending space, companies such as Navi, Lendingkart and InCred attracted most of the funding. In this area, companies raised a total of $704.5 million, up 67 per cent, according to Tracxn.

Some of the key acquisitions that took place in the first half of this year included the purchase of digital credit firm Paysense by fintech firm PayU for $185 million and the acquisition of delivery firm Daily Ninja by online grocery firm Bigbasket.

Sequoia Capital and Accel were the top VCs, while Steadview Capital and FMO were the top PEs in H1'20, according to Tracxn. This week Silicon Valley-based venture capital firm Sequoia said it has raised $1.35 billion to invest in firms in India and Southeast Asia.