Deep pocketed unicorns drive Indian startup ecosystem: Report

Chennai: Of the total $10 billion invested in tech startups last year, only $206 million has gone into seed and angel funds, a report said. Nearly $6 billion have been raised by unicorns in the coutry, it added.

The CB Insight report for 2018 stated the above data, highlighting that the surge in funding is driven by companies valued over $1 billion.

A unicorn is a privately held startup company valued at over $1 billion. According to TechCrunch, there were 279 unicorns as of March with Airbnb, Uber, Xiaomi and Pinterest find their names among the list.

Citing examples of VC-backed firms like Flipkart, Ola Cabs, PayTm and Oyo Rooms, the report stated that startups now run on the backing of firms with deep pockets.

Flipkart, which was recently bought by retail behemoth Walmart, raised $2.8 billion across several rounds in 2017, including SoftBank Group’s participation in the second tranche of its $1.4 billion in series J round in Q3 last year.

SoftBank has been one of the largest investors in all leading ride-sharing platforms in the world. In the Asia Pacific region, its other investments are with Singapore’s Grab, China’s Didi Chuxing and Brazil’s 99 (which was later acquired by Grab) in the ride-sharing industry alone.

Another Silicon Valley-based VC firm, Accel Partners, has funded 11 rounds to unicorn-valued companies. ‘Accel has invested in food delivery company Swiggy most frequently, participating in 6 rounds. This includes an $80M series E in Q2 2017,’ says report.

Many other startups have also entered the unicorn club by raising funds from SoftBank, Tencent Holdings Pvt Ltd and Tiger Global Management as the investment majors are betting high on the Indian unicorns for their expansion in Asia and beyond.

The report stated New York-based Tiger Global Management has invested in 22 rounds to companies that have received unicorn valuations.

The e-commerce site Flipkart and Olacabs are to name a few. Both companies have raised eight or more rounds of funding that have involved the investor.

It must be noted that between 2015 and 2016, as funding more than halved, the number of deals closed jumped 9.6 per cent – from 889 to 974, while in 2017, when the country hit a record of nearly $10 billion, deals dropped by 19.3 per cent.

Steady growth afar
According to NASSCOM, in 2018 aroud 1,200 new tech startups came to the fore. The report stated that the funding graph has seen a decline in the Indian startup ecosystem. The report states that despite an overall increase in funding, India’s tech ecosystem has not yet hit a steady pace of growth.

NT Bureau