Startups scouting for funds to grow their business had a happy 2019 as the year recorded the highest ever level of venture capital funds deployed in the country at $10 billion, 55% higher than in 2018, finds the India Venture Capital Report 2020 by Bain and Co. on Monday.
The report, released in collaboration with the Indian Private Equity and Venture Capital Association adds that another $7 billion of dry power (or investable capital) was available to the Indian startup ecosystem in 2020, indicating that deals activity should retain its momentum in the first year of the new decade as well. India saw a 30% increase in deal activity last year, as venture capitalists (VCs) were enthused by strong exits.
“The Indian VC industry passed through three distinct phases in the last decade. Between 2011 and 2015 the industry saw a rapidly evolving startup environment, with investors feeling positive about the expansion and scaling of first-generation startups,” the Bain report said. “This was followed by a phase of maturity and moderation between 2015 and 2017 with fewer, but higher-quality investments. Since 2018, marquee exits have renewed investor confidence.”
Around 80% of the VC investments in 2019 were concentrated around four business areas—consumer tech, software/SaaS (software as a service), fintech, and B2B (business-to-business) commerce and tech. However, India-focussed VCs raised $2.1 billion in new funds in 2019, slightly lower than 2018.
