With over $100 million (more than Rs 700 crore) funding in the first five months of this year, India’s technology startups are witnessing an investment surge at a remarkable pace, reported by Mint.
Deal-making has also broadened, across companies and sectors, moving away from a few large companies such as Ola, Paytm, and Flipkart, which used to top fundraising charts every year, the data report added.
“The depth of the market has become much clearer. Late-stage investors are investing at higher prices because companies are growing at a fast pace even at a sizeable scale and they can see a reasonable chance at making a 3-5x return from their entry price,” said Tarun Davda, managing director of Matrix Partners and an early backer of Ola.
The number of such deals so far has also been higher than all of 2016 and 2017, data shows.
“Sub-sectors are becoming deeper with attractive revenue pools, as well as user traction. Besides e-commerce and online services, we are seeing increased activity in SAAS, B2B Commerce and marketplaces, digital content and gaming and digital native/new-age consumer brands,” said Karan Sharma, executive director and co-head of the digital and technology vertical for Avendus Capital’s investment banking business.
The significant rise in the number of deals for the startups in India came to the forefront after the entry of new big investors.
For instance, Mirae Global Asset Management, which invested in BigBasket, and strategic investors such as Hyundai and Kia, which invested in Ola emphasized the sharp surge in the number of deals.
However, such a huge uplift in funding, sometimes, triggers valuation concerns with certain companies commanding far higher values than may be justified, said Sharma.
Moreover, there are several other startups which are, currently, in talks to raise more than $100 million which includes online pharmacies PharmEasy and Netmeds, content startups ShareChat and Dailyhunt, and Faasos owner Rebel Foods.