India has zoomed ahead of developed economies including China, Hong Kong, the UK and Canada in adding new startup unicorns during the third quarter of calendar year 2021, according to PwC in India.
A unicorn is a startup with a valuation of at least $1 billion.
India added close to 10 unicorns in the third quarter of 2021 versus seven by China and Hong Kong, and four each by the UK and Canada, signalling the rapid pace of investment activity in the country.
However, the US continued to lead the charts adding close to 68 unicorns in the third quarter of 2021 ending 30 September.
The third quarter of 2021 also saw Indian startups raise $10.9 billion alone across 347 deals. This is the first time investments in Indian startups have crossed more than $10 billion in a quarter, PwC said.
In comparison, the third quarter of 2020 witnessed Indian startups raise roughly $2.8 billion in investments as the country started relaxing restrictions to curb the spread of covid-19.
According to industry estimates, Indian startups have raised more than $24 billion in investments in the first three quarters of 2021 alone.
“Startups have leveraged the accelerated digital adoption seen amongst businesses and individuals alike to create newer business models and this is driving investor interest in a big way. We are seeing the average deal size increase and quicker funding rounds which has led to a surge in deal activity across sectors, since early this year,” said Amit Nawka, partner – deals and startups leader, PwC India.
More than 84% of the overall funding activity during the third quarter this year is focused on growth or late stage deals, while 61% of the total deal activity consisted of early-stage funding rounds, according to the consulting firm.
The average ticket size per round for early stage deals also moved to $4 million, during the third quarter this year. Further, startups including Ola Cabs, Pine Labs and Droom accounted for $880 million in pre-IPO fundraises during the third quarter.
Fintech, edtech, and software-as-a-service (SaaS) continued to be the top sectors in funding activity, cornering 47% of the total funding activity this calendar year.
In the first three quarters of 2021, investments in fintech grew by almost three-fold compared to the same period last year, as firms in the sector raised $4.6 billion. Investments in even edtech grew by almost 82% this year during the first three quarters as the sector witnessed $3.3 billion in investments.
While SaaS continued to register strong growth in investments, as businesses continued to extend work from home models and digitising processes. Investments in Indian SaaS grew from roughly $960 million in the first three quarters of 2020 to almost $3.2 billion for the same period this year.
Even investments in food tech grew from $1.03 billion during the first three quarters of last year to almost $1.87 billion this year, with 95% of the private equity investments in the sector cornered by Swiggy and Zomato.
However, the biggest growth in terms of investment growth was recorded by the direct-to-customer segment, with brands raising more than $1.7 billion in investments this year during the first three quarters, a five fold growth compared to the same period last year.