Indian Startups

Indian Startups begins the year with a bang, securing $3.5 billion in January

Business Startup

Despite a worldwide market slump, Indian Startups received record investments of up to $3.5 billion across 130 deals in January, setting a decadal high and signalling ongoing investor interest in the country’s expanding startup ecosystem.

According to data compiled exclusively for by specialist staffing firm Xpheno, the brisk pace, which has seen over four deals a day and over $115 million in daily inflows in disclosed deal value, comes at a time when the private equity and venture capital industry was bracing for a slower 2022 based on global and domestic cues.

According to the data, the total announced deal value in January is six times higher than the same month last year, when Indian entrepreneurs closed 75 deals worth $600 million, whereas, in January 2020, Indian Startups closed 65 deals worth $1 billion.

The robust performance follows a record year for venture capital investments in India, with $34.7 billion invested across 1070 deals in the calendar year 2021, up over 200 per cent from $11.4 billion invested across 795 deals in 2020.

The industry also saw a surge in megadeals last year, with 97 capital rounds totalling more than $24 billion.

In the two weeks preceding up to January 28, shares of newly listed tech-driven enterprises fell 20-30 per cent, compared to a 5-7 per cent decrease in the Nifty.

After a dramatic drop, shares of Zomato, an online meal delivery and restaurant discovery platform plummeted below their initial public offering price. Shares of One97 Communications, which owns Paytm, PB Infotech, which owns Policybazaar, and CarTrade Tech, which owns Policybazaar, have all dropped dramatically since their IPOs in January.

Indian startups are still well-positioned to deal with downturns and are more resilient, according to venture investors anticipating an industry-wide correction this year.

According to the Xpheno analysis, seed investments accounted for 34 deals this month, indicating a sustained surge of risk capital to back early-stage enterprises. In comparison to a total mix of 70% tech and 30% non-tech in 2020, the tech and the non-tech mix was a healthy 54% 46%.

Investor confidence in startups should persist, according to industry experts like Ankur Pahwa, partner and national head – e-commerce and consumer internet, EY India. The depth, adaptability, and acceptability of the ecosystem are fully acknowledged currently.

With more capital being used to generate capacity and drive expansion, the investment boom is also anticipated to fuel the need for additional labour, as it drives job creation and talent movement.