$3.1 billion in 3 months! Unicorns drive VC investments in Indian startups

According to the latest Venture Pulse report by KPMG, the last quarter of calendar year 2020 saw over $3.1 billion flow into the Indian start-up sector, largely led by the unicorns . On back of demand spurred by the pandemic in certain sectors, the home delivery, marketplace platforms, and e-commerce were the hottest areas of investment. Majority of funding rounds of $100 million or more, included a $200 million raise by marketplace platform Cars24, a $660 million raise by food delivery company Zomato. Overall deal count for the quarter jumped to 294 from 280 in previous quarter. Overall funding, however, dropped to $3.1 billion compared to nearly $4 billion in Q3 of 2020.

"Interest in staples delivery - fresh food, groceries, and the like - has grown quite significantly in recent months, in addition to online retail and gaming. That has driven a lot of investment. Then there's edtech. It's been an attractive area for VC investors for a couple of years now - but in 2020, that interest skyrocketed and so did the investments," says Nitish Poddar, Partner and National Leader - Private Equity, KPMG in India.

Edtech garnered interest from venture funds not only in India but across Asia in 2020.  For instance in China, Zuoyebang and Yuanfudao raised $1.6 billion and $1 billion, respectively. Back home UnAcademy  raised a massive $84 million in funding in Q4 of 2020. Yuanfudao's raise made it the most valuable private edtech company in the world at $15.5 billion, surpassing India-based Byju's, which was valued at over $11 billion last September.

Though 2019 saw a steady rise in investments, 2020 was a mixed bag with the first 2 quarters seeing subdued investor interest. However it ended on a high note in terms of recovered volume, and mega-deals signed that led to significant rebound in the H2 of 2020. "Over the next few quarters, edtech will likely continue to be a hot area of investment in Asia, with India potentially starting to see some consolidation in the space," the report said.

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