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Indian startups end on a high by raising a massive $14.5 billion across 1,185 rounds in 2019

With over 50,000 registered startups, India has the third-largest startup ecosystem in the world after the US and China. From raising $550 million in 2010 to $14.5 billion in 2019, the Indian startup ecosystem has come a long way witnessing a 25x growth over the decade.

A total of 887 startups raised $14.5 billion across 1,185 funding rounds, reported TechCrunch.

In 2019, a total of 81 financing deals ranged from $25 million to $100 million, up from 56 in 2018. Furthermore, there was also an increase in the number of deals valued over $100 million from 17 in 2018 to 27 in 2019.

A look at some of the largest funding rounds in 2019

Among the top 10 largest funding rounds of 2019, PharmEasy, Grofers and Bounce are the only three startups which are not unicorns. The biggest funding round of the year was OYO’s series F round which raked in $1.5 billion from its founder and CEO Ritesh Agarwal and SoftBank.

Paytm was the only other Indian startup to bag $1 billion in a single funding round. T. Rowe Price, SoftBank Vision Fund, Discovery Capital and Ant Financial were among the investors that helped Paytm raise 2019’s second-biggest funding round.

Top investors of 2019

The Indian startup ecosystem has grown on the account of numerous foreign venture capital (VC) firms backing Indian startups through India-focused funds. Recognizing the potential of Indian startups, these firms have been actively investing across all stages of the startups.

From creating new unicorns to enabling early-stage startups, these VC firms have not only raked in massive profits but also helped strengthen the overall startup ecosystem in the country.

As the year drew to an end, Lightspeed Venture Partners and Sequoia Capital‘s bet on OYO paid off in a big way helping the firms rake in around $400-500 million in profits collectively as they sold part of their shares to OYO founder Ritesh Agarwal.

As per the TechCrunch report, in terms of the number of investments, Sequoia Capital was among the most active VC investor of the year with over 50 investments closely followed by Accel with over 40. With more than 20 investments each, Tiger Global Management, Blume Ventures and Chiratae Ventures were among the other most active VC investors in the country during 2019.

While VC firms played a major role in enabling early and growth-stage startups, the involvement of private equity (PE) firms signalled the maturity of the Indian startup ecosystem.

With nine investments across startups like Ola, Dream11, BharatPe, NinjaCart, Unacademy and UrbanClap, Steadview Capital was among the top PE investors in the country. Other prominent PE investors fuelling the growth included General Atlantic with four investments, followed by three investments each by FMO, Sabre Partners India and CDC Group.

Sectors that raised the most funds in 2019

While the hotel aggregators raised the most funds, OYO scooped up the majority of those funds with a funding round of $1.5 billion. Startups in the e-commerce logistics sector raised a total of $641 million but even here most of the funding went to Delhivery, which raised a massive $413 million round. The same can be said for startups operating across horizontal B2B marketplace, ride-hailing and online insurance domains with majority of the funding being attributed to Udaan, Ola and PolicyBazaar respectively.

The numbers across the top sectors indicate that even with massive funding, the investors remained more inclined towards the more established startups.

Startup Hubs of India

According to Startup Genome’s Global Startup Ecosystem Report 2019, Bengaluru was ranked among the top 20 startup ecosystems across the world. Furthermore, Mumbai found a place in the report’s list of Challenger Startup Ecosystems which have the potential to become a part of the top 30 global startup ecosystems.

It is no surprise that with a startup share of 55-58%, Bengaluru, Delhi-NCR and Mumbai, continue to remain the top startup hubs in the country.

With 2562 startups being founded over the last three years, Delhi dominated the startup market share with 33%, followed by Bengaluru with 1587 startups and Mumbai being third with 1027 startups.

However, in terms of funding, Bengaluru startups raised the most funds by raking in $16799 million (47%) over the last three years, followed by Delhi-NCR at 33% and 11% each during the last three years.

Apart from the established startup hubs in the country, new emerging startup hubs like Ahmedabad, Jaipur, Kolkata and Kochi also gave rise to some of the leading startups in the country like Lendingkart, CarDekho, Beardo, Wow! Momo, among many others.

A part of the success of these emerging startup hubs can be attributed to the Startup India campaign that enabled the states to launch their own startup policies, from merely 4 Indian states with startup policies before 2016, today 26 Indian states have their own startup policies. This has been crucial in enabling tier 2 and tier 3 cities to become a part of the growing Indian startup ecosystem.

As the Indian startup ecosystem continues to grow at a rapid pace, it is expected to add another 50,000 startups by 2024. Furthermore, India is expected to be home to 95-105 unicorns with a cumulative valuation of $350-390 billion, according to a NASSCOM report titled ‘Indian Tech Startup Ecosystem 2019’.

While the Indian startup ecosystem has a lot of the things going for it, of a total of 58.5 million entrepreneurs in the country only about 8.05 million (13.76%) are women. There is still a need to make entrepreneurship more inclusive and only by enabling other women to enter the ecosystem can we unlock the full potential of the Indian startup ecosystem.

On a brighter side, more and more Indian startups are addressing the local challenges across domains and not just emulating the global trends. This is a sign of the growing maturity of the Indian ecosystem as it generates value across different sectors. As the Indian startups end the year 2019 on a high, they have set new targets for the Indian startup ecosystem for the coming year.

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