16 unicorns, US$ 11 billion funding: Indian startups rise sans Chinese money
- IBEF
- July 26, 2021
The year 2021 has proven that Chinese investment is no longer needed in a 'self-reliant' India amid the new normal, with 16 unicorns (startups valued at over US$ 1 billion) and more than US$ 11 billion in funding, primarily from US-based investment companies (until June-end).
As Indian corporates and wealthy individuals, as well as investors from other nations, came onboard to support the indigenous businesses, Indian digital startups began to avoid Chinese funding in 2020.
Investors have invested at least US$ 11 billion into Indian IT companies in over 600 deals in the first half of 2021, which is increasing at an exponential rate.
Tiger Global, a US-based investment company, has surpassed another US-based venture capital firm, Sequoia Capital, as the top investor in the booming Indian startup/unicorn sector.
NASSCOM, the industry's peak body, predicted that India will have 50 unicorns by the end of 2021. The country has already exceeded that figure, bringing the total to 52.
Digit Insurance, InnovAccer, Cred, Meesho, Gupshup, Pharmeasy, Groww, Urban Company, Mohalla Tech (ShareChat and Moj), Chargebee, Moglix, Infra.Market, Zeta, Five Star Business Finance, BrowserStack, and logistics business BlackBuck are the latest entrants to the US$ 1 billion value club.
The list will only grow in the coming months in a mobile-first country where internet and digital access is increasing by each going day.
Chinese investors invested US$ 3.9 billion into India in 2019, up from US$ 2 billion the previous year. This investment environment changed dramatically from May of last year, when Indian and Chinese soldiers engaged in clashes along the Line of Actual Control (LAC) in eastern Ladakh.
As a result, Chinese investment in Indian firms decreased to US$ 263 million in the first half of 2020, spread across 15 agreements. As a result of the environment, domestic tech firms began to search for funding overseas, and their requests were answered.
According to media estimates, China has over 150 investment requests worth more than US$ 2 billion blocked in the pipeline.
The surge of new unicorns and IPOs, according to Mr. Prabhu Ram, Head-Industry Intelligence Group (IIG), CMR, heralds the beginning of the golden age of India's consumer internet startup ecosystem.
"India's digital economy has grown on the strength of robust digital infrastructure, including increased smartphone penetration, low data rates, and soaring app downloads," Mr. Prabhu Ram told IANS.
He added "The epidemic has boosted digital usage even more in the last year. Startup entrepreneurs from urban and aspirational India have been solving for a variety of distinct use cases in response to the requirements of the digital economy"
Zomato CEO Mr. Deepinder Goyal stated, "The enormous reaction to our IPO gives us the confidence that the world is full of investors who recognise the size of investments we're making and have a long-term view of our business."
New-age consumer tech-driven businesses, which impacted millions of people's everyday lives during the epidemic, have jumped on the investment bandwagon and are making money.
"India's consumer internet ecosystem is amid a perfect storm as India and the rest of the globe try to recover from the epidemic. Investor appetite for risk-taking will rise as a result of recent startup triumphs, which will also draw international investors" Mr. Prabhu Ram made a point.
According to a Nasscom-Zinnov research, the Indian software startup ecosystem grew at an annual rate of 8-10% last year, with over 1,600 businesses and a record number of 12 new unicorns — the most ever in a single calendar year.
That record was already broken in the first half of this year, and the great Indian IT startup narrative is poised to take another major step forward in the second half.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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