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Report says India saw venture capital investments worth $10 Billion in 2020

According to a report, Venture capital investments in India touched $ 10 billion during the pandemic-hit 2020 and as many as 7,000 new startups emerged during the same period.

Bain & Company’s latest India Venture Capital Report, released on Wednesday, also stated that consumer tech, SaaS, and fintech accounted for almost 75 percent of the VC (Venture Capital) investments by value, with consumer tech attracting the maximum funding.

According to the report, published in partnership with Indian Private Equity & Venture Capital Association (IVCA), there was a significant impact of COVID-19 in hastening digital trends, which was visible in VC money flows and the inception of new and virtually founded business models across sectors.

“While the total deal value declined slightly to $ 10 billion in 2020 from $ 11.1 billion in 2019 due to smaller average deal size, deal volume grew by 7 percent with approximately 810 VC deals versus 755 seen in 2019.”

“Growth in deal volume signaled strong fundamentals for India’s start-up ecosystem with new business models keeping pace with the challenges seen in 2020,” it said.

As per the report, India maintained its vigorous position among the top five startup ecosystems globally, with 7,000 new startups founded in 2020.

It also stated that the country’s startup ecosystem remains robust with “12 additional companies achieving ‘unicorn’ status in 2020, taking India’s unicorn group to a total of 37 and only behind the US and China globally”.

Presently, out of more than 1,10,000 startups in India, around nine percent are funded, suggesting considerable room for further investments, it added.

Sriwatsan Krishnan, Bain & Company partner and a co-author of the report, said, “While 2020 witnessed $ 10 billion in VC investments, which is the highest ever barring 2019, we also saw a few themes play out differently, especially in terms of smaller deals on average compared to multiple mega-deals seen in 2019… overall, we are bullish on VC investments going forward, given the dry powder available.”

Active VC funds in the country that have been on a stable growth track over the last four years reached about 520 last year.

In 2020, VC exists reduced by about 70 percent to $ 1.3 billion from $ 4.4 billion in 2019 as a result of the terrible impact of the pandemic on businesses and VC portfolios not reaching maturity.

One-third of the exit value came from edtech and about 20 percent from foodtech, sectors that also witnessed a rise in end-user adoption and funding activities during the pandemic, the report said.

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