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Startup Investments hit record high with $7.5 Billion in 2018

Startup investments in India rose to their highest ever figure of $7.5 billion in 2018 (across 476 deals), according to data from Venture Intelligence, a research service focused on private company financials, transactions and their valuations. Led by the $1 Billion investments in Swiggy and Oyo, the investment value more than doubled compared to 500 deals worth $3.5 Billion recorded in 2017. Including the above two deals, there were thirteen $100M+ deals in 2018 accounting for 56% of the deal value(Note: Startup investments include Seed to Series G investments by venture capital and private equity funds in companies less than 10 years old. The data hence doesn't include investments like Berkshire Hathway's investment in One97 Communication/Paytm.)

The year saw the creation of 8 unicorns, more than any other year. Apart from well known consumer companies like Swiggy, Byjus, 3 B2B companies - Freshdesk, Udaan and Billdesk - also attained Unicorn status.

By Sector

Tech and tech enabled companies continue to receive a major share of the startup investments. Their share of investments went up slightly from 85% to 86% in 2018. Non tech investments were down 10% compared to 4% for tech investments. Like 2017, 60% of investments went into B2C companies. While the first quarter of 2018 opened with B2B companies competing neck to neck with B2C, B2C startups gained more share from the second quarter.

With 95 investments, E-Commerce grabbed the highest share of investments accounting for 18% of investment activity followed by Fintech (with 79 deals). The third largest sector was Healthtech with 62 deals.

The most funded business models in 2018 were Consumer & Business Lending, Grocery delivery, e-Pharmacies, B2B E-Commerce and SaaS - CRM companies. Apart from Artificial intelligence enabled business, upcoming sectors which saw purchase from investors include Auto startups, Gaming, Rental startups and Robotics.

By Round

Deal volume has been consistently falling from 629 deals in 2015 to 476 deals in 2018, primarily led by the fall in Early Stage investments. The Early Stage segment has been falling more than 15% every year since 2015. Investments by Super Angels and Angel Networks have been stuck at the 200 mark for the past few years.

Established companies have gone on to raise bigger and bigger rounds, some in the same year with much higher valuations. Rounds Series C and beyond have increased 55% in terms of volume and 2.2x times the value invested.

By City

While Bangalore and NCR continue to be favourite hunting grounds for VCs, a deeper dive shows  other cities which gained market share in 2018. Among metropolitan cities Mumbai and Chennai were the only two to see more investments in 2018 than 2017. The state of Kerala and city of Jaipur are also a couple of regions VCs made more investments in 2018 than 2017. Hyderabad saw a dip in startup investments in 2018.

Mumbai especially bounced back quite strongly from the lows of the last two years - on the back of strong investments in Fintech and E-Commerce startups, others sectors backed in Mumbai are FMCG, Fashion, Healthtech, and Logistics tech. For Chennai, apart from SaaS as well Deeptech - especially startups incubated at IIT - Madras.

Most Active Investors

Sequoia Capital India overtook Accel India as most active investor with 36 investments (in 32 startups). Accel made 31 investments (in 28 startups) followed by three investors - Blume Ventures, Kalaari Capital and Nexus Venture Partners with 18 startups.

Investors who increased their growth capital investments in 2018 include DST Global, Nexus Venture Partners, Naspers, Sistema Asia, and Lightspeed Ventures. Seed funds who increased their investment activity in 2018 were SIDBI VC, IAN Fund and Axilor Ventures.

Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.

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