Year Ender 2021: Start-up investments in 2021 touch $34 billion, see over 200% jump

This year undoubtedly has been all about India's digital upstarts. As per data sourced from Venture Intelligence, new-age digital start-ups bagged a record $32.8 billion investments in 2021, as of December 17. This is excluding the $1.2 billion funds raised by various start-ups on December 20 and 21, which, when included, takes the total capital investments to $34 billion.

This translates into an year-on-year (YoY) increase of over 200 per cent in start-up investments as compared to the $11.2 billion investments seen in 2020. Investments into India's start-up ecosystem in 2019 stood at $13 billion.

The data on investments in 2021, taken from a study by Venture Intelligence, has not taken into consideration the $3.6 billion raised by e-commerce giant Flipkart in July, which was the homegrown e-tailer's first capital raise since it was bought by retail behemoth Walmart in 2018.  

The deal volume in 2021, according to the study, also increased by almost 28 per cent YoY as of December 17. The number of deals in 2021 stood at 1,009 as compared to 788 deals in 2020 and 879 in 2019.

Experts argue that what has worked for Indian start-ups is the current favourable regulatory environment which has not only promoted private capital investments into new-age digital companies but also eased the compliance burden when it comes to listing on domestic stock exchanges. However, the rise in not just because of these factors. The regulatory ambiguity currently prevalent in China, especially after the recent tougher stance of the government on foreign investments, has also resulted in the sharp increase seen in investments. The pandemic-induced digitisation of enterprises and work-from-home culture have also strengthened investors' sentiments when it comes to India's digital economy, both as a market as well as a global solutions provider.

Top 5 funding rounds of 2021:

The Venture Intelligence study stated that the Bengaluru-headquartered edtech decacorn Byju’s bagged the largest investor round at $1.39 billion, which saw participation of Footpath Ventures, GSV Ventures, ADQ, Owl Ventures, B Capital Group, Prosus Ventures, Silver Lake, and Blackstone, among others.

It was followed by gaming unicorn Dream11’s $840-million capital raise from RedBird Capital Partners, Footpath Ventures, D1 Capital Partners, Falcon Edge Capital, DST Global, TPG Capital and Tiger Global.

Food delivery giant Swiggy’s $800-million funding round was the third largest VC-led capital raise in the start-up ecosystem in 2021. Think Investments, Wellington Management, Prosus Ventures, Qatar Investment Authority, Falcon Edge Capital, Amansa Capital, Accel India, GIC, Goldman Sachs and others participated in the funding round.

Mumbai-based edtech firm Eruditus bagged $650 million in August from investors such as Accel USA, CPPIB, and SoftBank Corp.

The fifth biggest funding round was that of social commerce unicorn, Meesho, which raised $645 million from Footpath Ventures, Good Capital, B Capital Group, Prosus Ventures, Trifecta Capital, CapitalG, Fidelity India, SoftBank Corp, and Symphony International Holdings and others.

(The story has been edited to correct the percentage increase in investments and number of deals.)

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