While investments in Indian start-ups by private equity and venture capital funds have reached an all-time high, the amount of transactions also increased significantly in the first eight months of 2021.

As of August 19, there were 37 transactions in the $ 250 million to $ 1,000 million range and 14 transactions in the $ 250 to $ 500 million range, compared to only 31 and 4 transactions, respectively, in the same categories throughout. long 2020.

In addition to traditional private equity funds, there have been inflows from family offices, HNIs and companies.

Additionally, the crackdown on the startup ecosystem in China has made Indian startups more attractive to foreign investors.

According to data consulted by Activity area from Tracxn, large contracts over $ 500 million are also trending upward with seven such deals so far this year, up from eight in 2019 and 12 in 2020. In terms of overall funding, start-ups -up Indians recovered $ 24.5 billion in 2021 out of 729 transactions, against $ 22.05 billion raised in 2020 on 1,000 transactions and $ 19.94 billion raised out of 1,061 transactions in 2019.

Main sectors

“Some sectors have benefited disproportionately like SaaS, e-commerce, edtech and healthcare technology, while others, including entertainment, hospitality and travel, have suffered,” said Jatin Desai, Managing Partner of Inflexor Ventures. Activity area.

Desai added that the excess liquidity in the economy and falling interest rates created FOMO (fear of running out) and people were looking for areas to invest in. start-ups, have also started to allocate part of their funds to start-ups. This reaction was further observed in early 2021. China’s crackdown on its tech and start-up ecosystem has also led to some foreign funds being diverted to Indian start-ups, ”he said.

Said Karan Mohla, Executive Director of Chiratae Ventures: “Over the past two years, Indian investors have started to invest more. Many private equity funds that were not very active before have also entered.

Better exit opportunities

Analysts said that with the growing number of IPOs and unicorns emerging from India in 2021, the market has improved dramatically, providing attractive exit opportunities for investors.

Desai added, “This wave of start-up IPOs offers good exit opportunities for investors. Previously, investors had to wait for mergers and acquisitions and major financing rounds to get an exit. “

“Zomato and other IPOs, being a very 2021 phenomenon, have assured investors, both in India and around the world, that there will be significant results from public markets and mergers and acquisitions. And finding good growth opportunities and a great founding team is difficult. This is why we are seeing higher valuations. We haven’t seen a similar scenario in India earlier, ”added Mohla.