A startup data tracker, carried out by Venture Intelligence, has revealed that investments in growth stage startups crossed the billion-dollar mark in the September quarter and hit a four-quarter high, driven by a handful of investors deploying capital more aggressively than ever, reported Mint.
The data further informed that Series B and C rounds saw $1.13 billion in funding in the September quarter, more than double the capital raised two quarters ago, and 33 per cent more than the $848 million raised last quarter.
The funding boom comes in the face of a macroeconomic slowdown in India, and an internet funding slowdown in China and the US.
“Till about a few years back, the same set of venture capital (VC) funds would invest across multiple stages. As it has happened in other large venture markets, several Series B and C specific funds like A91, B Capital, Epiq, Fundamentum, Vertex, Avtaar, Iron Pillar etc have now emerged in India,” said Rahul Chowdhri, partner at Stellaris Venture Partners, an early stage investor.
While, as per the investors, the growth stage funding boom is due to a number of new dedicated investors in this space, rather than broad-based funds, as well as existing investors, such as Tiger Global, Steadview Capital and Ribbit Capital becoming more aggressive this year, after a hiatus or selectively investing in the last few years.
“In addition, several Series A companies over the last couple of years have scaled very well which has attracted the attention of several global investors. Both these factors have led to an increase in B/C investments,” Chowdhri added.
Furthermore, Mint reported that growth stage investments in Indian startups breached the billion-dollar mark in the first half of this year.
“(I am) surprised that the number of investments is the same. The quality of entrepreneurs is vastly improved and while one can question valuations, even the biggest critics acknowledge that some high-quality and valuable businesses are being built leveraging technology. Which is why it is surprising that the opportunity pipeline has not widened. It should improve overall as a lot many ideas are now getting the initial funding and purchasing power continues to improve,” said Abhay Pandey, partner at A91 Partners, a growth investment firm.
“The capital from India-based funds has been stable. Strong flows from overseas over short periods cause the frenzy as we are witnessing today. With China certainly slowing and doubts emerging on valuations of a few large global companies, it is only a matter of time before the India sentiment gets sober,” Pandey added.