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India sees venture capital investments surge to $8 billion in Q2: KPMG

IBEF:  July 28, 2021

Due to the broad application of digital business models in the epidemic, venture capital investments in India surpassed the previous record high established in Q4 2019, spurred not just by VC investors but also by more traditional funds experiencing a sense of FOMO (Fear of missing out).

According to professional services company KPMG, a variety of firms are receiving VC investment in India, particularly those focused on direct-to-consumer products such as e-commerce, food delivery, hyper-local grocery delivery, video sharing, and gaming.

Investors continued to pour money into edtech businesses this quarter, including BYJU, which secured a US$ 1.5 billion investment round. Food delivery was also a major topic in Q2 2021, because to Swiggy's US$ 800 million fundraising.

According to Mr. Nitish Poddar, Partner and National Leader for Private Equity at KPMG in India, an increasing number of tech-enabled firms in India are seeking financing through capital markets.

"This gives early-stage, mid-stage, and late-stage financial sponsors a new way to profit from their investments. This is a substantial departure from the previously accessible exit path for financial investors, and it will only serve to boost the appeal of these firms "he stated.

According to Mr. Anand Vermani, Partner and Co-Head of Corporate Finance at KPMG in India, the number of venture capital agreements in India has reached an all-time high, extending the rally that began in the third quarter of 2020.

According to him, major investments are following solutions based around financial services and delivery, which span firms that provide on-demand financial assistance, B2B e-commerce, D2C, meals & grocery, supply chain & logistics, and mobility.

"The entry of so-called traditional funds with significant ticket investments into this area provides a strong vote of confidence and legitimacy to the operational strategies of these new age firms," said Mr. Anand Vermani.

Global VC investment, on the other hand, increased from US$ 147.2 billion in 8,557 deals in Q1 2021 to US$ 157.1 billion in 7,687 deals in Q2 2021.

In the second quarter of 2021, VC investment in Europe totaled US$ 34 billion over 1,848 projects, up from US$ 23.9 billion across 2,150 deals in the first quarter.

Despite a drop from US$ 42.8 billion across 2,066 deals in Q1 2021 to US$ 38 billion across 1,998 deals in Q2 2021, VC investment in the Asia Pacific area remained strong in H1 2021.

In Q2 2-21, corporate investment was quite strong, accounting for US$ 73.9 billion. First-time financings totaled US$ 20.1 billion in the first half of the year, considerably ahead of the record high of US$ 32 billion observed in 2018.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.