Indian Tech Startups Raise Rs 86,000 Crore Via 872 Funding Rounds In 2019 – A New Record For Tech Startups!

Indian tech startups are experiencing tremendous growth this year and there are still two months remaining to add more capital to the local ecosystem compared to the slow funding during 2016.

According to the report, the technical startups have raised $11.3 billion or Rs 86,000 crore this year which is a quite significant change from last year’s $10.5 billion fundraising.

These figures also signify that it is the largest sum raised by local ecosystem till now. This also implies that the nation’s startup space is flourishing and having steady growth.

During 2016, the tech startups have gathered around $4.3 billion which was much lower than the year before around $7.9 billion.

The growth displays a significant flow of capital in the ecosystem as in 2017 the Indian startups have reported $10.4 billion growth.

Who Aced The Game This Year?

According to the report, the startups with financial services and consumer-facing offerings have raised most of the venture capital to be exact around $8.2 billion this year.

Coming to the retail startups, they have gained around $2.3 billion this year. The startups offering enterprise services have raised about $1.5 billion note that some of these startups provide overlapping services.

According to Dev Khare, a partner at VC fund Lightspeed Venture Partners said that the phenomenal performance by financial services indicates the investors growing appetite for equity also shows the thrive in Indian local ecosystems.

Why Did This Happen?

Khare also informed that in 2014 and 2015, startups were largely focused on building e-commerce solutions and replicating ideas that worked in Western markets.

He said, “But today, they are tackling a wide range of categories and opportunities and building some solutions that have not been attempted in any other market,”.

He also said that this change occurred due to arrival of Reliance Jio telecom operator and also because of the government’s efforts in the form of policies and reforms.

Some reforms like GST taxation system for businesses and the introduction of UPI payments infrastructure can be considered.

Some Important Players

Talking about Jio, its a three-year-old telecom operator run by India’s richest man, Mukesh Ambani.

It has provided mobile data at incredibly low cost overcoming all the existing competition form this segment. That means that overnight, millions of Indians could be able to access the internet for the first time in history. 

Along with this, there was a cash crunch happened in New Delhi at the end of 2016 which caused an instant demand for content and services.

Khare informed that another player in this game is mobile wallet services, they created a massive opening for local startups to innovate.  

Paytm the financial services has raised over $2 billion to date also reported more than 200 million registered users in India.

On the other hand, Google Pay has acquired over 67 million active users in less than two year’s time from its launch.

How Did It Affect People’s Thought Process?

There is also a change in people’s thinking process in India as they are willing to work at a startup now.

Khare said that in 2010, only 10% of the founders of startups that had reached a Series A financing round had worked at a startup before. This figure rose to 36% in 2014 and spiked to 70% last year.

What Does The Future Fold For Us?

The industry is giving many positive signals like – 

Indian news outlet The Morning Context citing data from research firm Venture Intelligence reported on Wednesday that –  

Considering the top 150 Indian startups that raised capital in the first half of this year, 17.3% of them were either led or co-led by women.

According to reports, It’s a massive leap from last year when just 10% of startups counted women as their founder or co-founder.

Also concentration of funds in a smaller number of startups – a trend that appears to continue from the last several years. 

According to the report, as of date tech startups in India have participated in 872 financing rounds, compared to 924 last year, and 1,141 in 2017.

It is expected that the total fundraise amount may substantially change by the end of the year as many more startups are preparing to close new financing rounds.

Zomato,  Swiggy and Paytm probably would close the rounds worth around  $3 billion in the coming months. (reference)

Overall It is a fascinating turnaround for the nation, which was a very small startup ecosystem 10 years ago. 

The Paytm founder and CEO Vijay Shekhar Sharma recounted how difficult it was for him to raise a few hundred thousand dollars in the early days of One97, the parent firm of Paytm.