Indian Startup Funding Crosses US$ 10 Billion in Q3, First Time in Any Quarter: PwC

Indian startups received record funding in Q3 of CY21, with investment totalling US$ 10.9 billion through 347 deals, it is the first-time investments in a quarter that funding have crossed the US$ 10 billion mark, as per the PwC India. This was double the amount of funding received in Q3CY20 and was up ~41% over the Q2CY21 figure, stated the outcomes of the report titled ‘Startup Perspectives-Q3CY21’. The growth in funding activity was observed across all sectors, both in terms of value and volume.

Although, fintech, edtech and SaaS are the leading three investment sectors in CY21, collectively accounting for ~47% of the total funding activity. The fintech sector saw a quadruple increase in funds raised in the first three quarters of CY21, over the first three quarters of CY20. Six fintech companies achieved unicorn status.

Debating the investment in startups 2021 so far, Mr. Amit Nawka, Partner–Deals & Startups Leader, PwC India, stated, “Start-ups have leveraged the enhanced digital adoption observed amongst businesses and individuals alike to establish newer business models and this is propelling investor’s attraction in a big way. We are noticing the standard deal size increase and faster funding rounds which has led to a rise in deal activity across sectors, since early this year.”

Startup Outlooks for Q3 of CY21-

• Fintech investments: FinTech investments in India in CY21 have grown exponentially. In the first three quarters of 2021 investments worth US$ 4.6 billion in the FinTech sector were logged, ~3x from US$ 1.6 billion in 2020.
• Investments worth US$ 2.5 billion for 53 closed deals were logged in Q3 of CY21 alone around different stages of investment. The FinTech ecosystem witnessed investments across the spectrum of business with investors demonstrating a renewed interest in companies operating in the segments of InsurTech, WealthTech, neobanks and financial technology enablers.
• Stages of funding: ~84% of the funding activity was propelled by growth- and late-stage deals. Though, these exemplified ~39% of the total deal activity (volume terms). ~61% of the total deal activity comprised of early-stage funding rounds for US$ 1.6 billion (average ticket size per round US$ 4 million) early stage/seed firms.
• Pre-IPO round raised for US$ 880 million in CY21 by firms nearing IPO—Ola cabs, Droom, Pine Labs.
• City-based funding activity: Bengaluru and Delhi NCR remain to be the key start-up cities in India, collectively contributing ~76-78% of the total funding activity in the first three quarters of both CY20 and CY21, followed by Mumbai and Pune.
• Global and Indian unicorns: A total of 114 private start-ups (globally) turn into unicorns in CY20. The number increased significantly in 2021 as 371 start-ups have previously become unicorns in the first three quarters of CY21. Geographically, maximum unicorns in Q3CY21 have come from the US, with India in the second position. FinTech and SaaS are the most exemplified sectors in Q3CY21 both globally and in India.
• Three decacorns (privately held startups valued at over US$ 10 billion) were included in 2021, all from China and Hong Kong. Currently, India has two decacorns (Paytm and Byju’s).