The Early Stage funding environment in India - especially Seed and Series A investments - continues to be vibrant. According to Venture Intelligence data, 250 companies raised Series A investments during 2021 - up 75% from 142 companies in 2020.
Seed and Series A investments were up by 88% and 22% respectively in the Jan - Mar 2022 quarter (over the same period in 2021). (Even in the ongoing quarter – even as late stage funding has started to slow down significantly – the pace of Early Stage investments have held up.)
What explain the resilience in Early Stage funding? And, will the vibrancy last? The first edition of a new report series from Venture Intelligence – The Series A Landscape Report – provides scope for optimism.
Some of the data highlights from the report:
Series A Investments:
• The number of companies raising Series A rounds grew at a brisk CAGR of 19% in the four year period from 2017 to 2021.
• E-commerce was the most preferred sector for Series A investments during 2015-2021 period, followed by SaaS, Fintech, Healthcare (including Healthtech) and Food & Beverages (including D2C brands).
• The most active Series A investors during 2018-2021 included Sequoia Capital India (with 79 such investments), Accel India (46 investments), Matrix Partners India (28), Beenext (28), Blume Ventures (27) and Elevation Capital (26).
• Sequoia Capital India and Accel India had invested in 63% of their Series A investee companies as part of their seed rounds (excluding companies that raised a direct Series A round).
• IAN Fund (88%), India Quotient (86%) and Blume Ventures (80%) had the highest ratio of follow on participation in Series A rounds (for startups which they had Seed funded).
Seed Investments:
• The 2015-2021 period witnessed an average of 540 seed deals each year, shooting up sharply to 756 deals in 2021.
• SaaS was the most preferred sector for seed investments (during 2015-2021) followed by E-commerce, Fintech, Healthcare (including Healthtech) and Edtech.
• The Top Seed Investors during 2018-2021 included Sequoia Capital India (88 startups), Axilor Ventures (49 startups), Accel India (48), 3one4 Capital (41), Blume Ventures (39) and India Quotient (36).
• Startups from Bangalore were the most favored by investors – both in the Seed and Series A segments - during the 2015 2021 period, followed by startups from National Capital Region and Mumbai.
Venture Capital Funnel
A Key Highlight of the Report is the "Venture Capital Funnel" that shows the fraction of companies that have "graduated" from receiving Seed investments to Series A investments and from there to Series B investments and beyond.
Of the 2,848 companies that raised Seed investments during the 2015-2021 period, only 18.1% (516 companies) progressed to the Series A Round. And, from those 516 companies (that raised Seed and Series A rounds during 2015-2021), 174 companies (33.7%) went on to raise the Series B round. Of the 174 companies, 76 companies (43.7%) went on to raise the Series C round. Almost a third of the companies that raised a Series C round (32.9% or 25 companies) managed to raise subsequent rounds during the period of study.
The Report also highlights “Pipeline Creators” – investors that make seed investments that are relatively more successful in raising Series A investments. Sequoia Capital India was the Most Active Series A pipeline creator in the 2018-2021 period, with its Seed investments in 35 companies that went on to raise a Series A round. Sequoia was followed by Blume Ventures which had backed 20 such companies and India Quotient that seed funded 19 such companies.
Visit https://www.ventureintelligence.com/seriesareport.htm to download the full Report, rich with additional data, graphs and charts.
Conclusion
“‘Series A is the crucial link between a vibrant seed stage and a mature late stage VC ecosystem. But there is very little data on this. This report by VI is a timely spotlight on an important metric that founders and investors should pay more attention to,” said Ganapathy Venugopal, CEO of Axilor Ventures.
“The first edition of the Series A Landscape Report clearly highlights how rapidly the Indian Early Stage funding ecosystem has matured in recent years,” said Arun Natarajan, Founder of Venture Intelligence. “The deepening of the market for digital products and services, high liquidity among domestic investors - including a new class of angels in the form of successful startup founders and early employees of Unicorns - and trend setting global investors like Tiger Global moving focus to the Early Stage, look set to keep up the vibrancy in this crucial segment,” he added.
About Venture Intelligence
Venture Intelligence, a division of Chennai, India-based TSJ Media Pvt. Ltd., is India’s longest serving provider of data and analysis on Private Company Financials, Transactions and their Valuations in India. For more information, please visit https://www.ventureintelligence.com
