Venture capital investments have picked up pace in India and though have not reached the highs of 2014-15, in terms of interest levels they are probably the highest in a long time, says Nitish Poddar, India Partner and National Leader Private Equity at KPMG.
Professional services company KPMG recently released its quarterly report on VC investments, which said that the start-up ecosystem saw over $2.5 billion investment in the third quarter of 2018, which was almost double from over $1 billion invested in the second quarter. Despite the increase, this is half of the $5 billion invested in the third quarter of 2017. Poddar points out that the Q3 2017 numbers were high because of the of $2.5 billion SoftBank invested in Flipkart. "So if you were to remove that transaction and look at it on a quarter on quarter basis, there is growth, more importantly in the per ticket size," he added.
The report says that India saw a quarter on quarter increase in VC investment buoyed by $1 billion raised by hotel booking company Oyo Rooms to finance its expansion into China. While there were 15 deals in Q3 of 2018, there were 50 in the second quarter. "With the big funding round, Oyo became India's second most valuable technology start-up after Paytm and leapt into unicorn status with a $5 billion valuation. India also saw several $100 million plus megadeals this quarter, including $225 million by Udaan, $120 million by Curefit and $100 million by BookMyShow," the report said.
It also added that online marketplaces continued to gain a lot of traction in India during the quarter, with the second-hand car company Cars24 raising $50 million. The second-hand market for cars has been a big focus for investors this year. In Q218, Droom raised $30 million in funding led by Toyota and Tokyo-based VC firm Digital Garage.
Poddar also says that the general euphoria in terms of the excitement the valuation is far better now as compared to the last year. However, he adds that going ahead there might be a pause because of general elections. "While this euphoria will continue until November but once the election dates get announced the financial sponsor community will wait and watch because at the end of the day they want a stable government," he says.
KPMG's venture pulse report which tracks VC investments across the world, reported that global VC investments in 2018 so far has surpassed the previous annual record set in 2017 during Q318.
"With one quarter still remaining in 2018, VC investment globally surpassed the record $171 billion raised during all of 2017. While the number of VC deals remained just over half of the peak annual high of 19,890 achieved during 2015, deals have become much larger, thus accounting for the massive uptick in investment," it said.