2023 witnessed 67 mega deals ($100 M+ rounds) worth $21.2 Billion, compared to 112 such investments worth $31.8 Billion in 2022….writes Sanjeev Sharma
The value of investments by Private Equity – Venture Capital (PE-VC) firms in India fell by 38 per cent to less than $30 Billion in 2023. PE-VC firms invested $29.7 Billion (across 756 deals) in Indian companies in 2023, compared to $47.6 Billion (across 1,362 deals) in the previous year, as per Venture Intelligence.
2023 witnessed 67 mega deals ($100 M+ rounds) worth $21.2 Billion, compared to 112 such investments worth $31.8 Billion in 2022.
The $2.4 Billion investment in Manipal Hospitals by Temasek (which gained majority control) and TPG Capital was the largest PE-VC investment in 2023. This was followed by the $1.35 Billion buyout of education loans focused HDFC Credila by Baring Asia and ChrysCapital and the $1 Billion investment by Qatar Investment Authority (QIA) in Reliance Retail.
2023 saw just two Unicorn companies (VC-funded startups valued at $1 Billion or more) being created, compared to 21 in 2022 (and a record 44 in 2021). Quick commerce startup Zepto (which attracted $ 231 million led by foreign investors in August 2023), was joined on the unicorn list towards the year end by consumer & small business loans firm Incred Finance (which attracted $60 million from domestic Family Offices and HNIs).
“While large ticket PE investors focused their attention towards sectors like Healthcare, Financial Services and Infrastructure, 2023 saw the slowdown in Growth- and Late- Stage investing trickle into the Venture Capital segment as well,” noted Arun Natarajan, Founder of Venture Intelligence.
“Towards the year end, on the back of strong public markets, private markets received a dose of optimism, which also translated into a few large growth stage tech investments going through,” he added.
India is ranked third with 72 unicorns (companies with a valuation of $1 billion and above), after the US…reports Asian Lite News
The number of unicorns in India has been reduced to 72 with a total valuation of $195.75 billion, from over 100 unicorns last year, according to a new report.
India is ranked third with 72 unicorns (companies with a valuation of $1 billion and above), after the US (668) and China (172), according to the report from Forex.com, via data obtained and analysed from CB Insights.
Despite a lower average valuation per unicorn at $2.72 billion compared to some counterparts, India’s unicorns make a substantial 5 per cent contribution to the total global unicorn valuation.
This places India in league with the UK, emphasising its significance in the international startup arena, the report mentioned.
The US has the highest number of unicorn companies worldwide with an impressive 668 — over three times more than China in second place (172).
Unicorn companies in the US have a combined valuation of over $2 trillion, accounting for over half (54 per cent) of the total valuation of unicorn companies.
The research commissioned by Forex.com also revealed that the enterprise tech industry dominates unicorn companies globally, boasting a total of 377 with a combined valuation of just over $1 trillion.
The highest-valued company within the enterprise tech sector is Canva, with an impressive valuation of $40 billion. Canva has the fifth highest valuation out of all global unicorn companies.
Enterprise tech is projected to remain its position as a leading industry, surpassing growth and total valuation projections by 2027.
Within the financial services sector, 216 companies boast a combined valuation of $706 billion. Stripe claims the title for the highest-valued company within financial services valued at $50 billion and ranks fourth overall.
Despite having the same number of unicorn companies, those in the financial services industry have a 10 per cent higher total valuation than the consumer and retail industry. The consumer and retail industry ranks third (216), with a collective valuation of over $631 billion.
The unicorn with the highest valuation within this industry is Shein, valued at $66 billion, ranking third globally. Shein is valued at $8.17 billion higher than the combined valuation of all 27 unicorn companies in the insurance industry ($57.83 billion), the report mentioned.
Kerala Startups Miss Defense Wave
Kerala-based startups are yet to take full advantage of immense opportunities in defence and aerospace sectors, which have gone up manifold after the launch of ‘Atmanirbhar Bharat’ initiatives, panelists said at a session at Huddle Global 2023.
Col Sanjeev Nair (Retd), CEO, Technopark, noted that homespun startups of Kerala have not leveraged the opportunities thrown up by the iDEX scheme, which was launched by Ministry of Defence (MOD) to promote, support and onboard innovative solutions in this critical sector.
A flagship scheme of MOD, iDEX is funded and managed by Defence Innovation Organisation (DIO) to create an ecosystem to foster innovation and technology development in defence and aerospace by engaging industries, including MSMEs, startups, individual innovators, R&D institutes and academia.
“The scheme is backed by grants and various other supports. The number of Kerala startups that have taken advantage of this flagship project, however, is very less,” said the now retired Colonel.
Group Captain Saurabh Shiv of the Indian Air Force (IAF) said with the country pursuing a pro-active approach to achieve self-reliance in critical domains, startups can take the best advantage of the entire ecosystem that has been created to acquire innovative solutions and technologies in the defence sector.
“IAF, for instance, is looking for indigenously developed solutions that will enhance self-reliance and capacity. Challenge is available, funding is available. The ball is in your court. Please rise up,” he said exhorting the nascent companies to dabble into the defence sector.
Rajaguru Nathan K, Director, Astromedia Space Pvt Ltd, recalled his company’s journey with iDEX scheme after starting off as a space-medicine startup.
Govt goes bullish on startups with ESOP holiday, tax relief.
Of those heavy loss-making unicorns, 14 were from the e-commerce sector, followed by fintech at 13, and consumer services at six unicorns…reports Asian Lite News
The great Indian startup and unicorn party, which saw record funding volumes in 2020, 2021 and the first half of 2022, appears to be over for now as several top names in the ecosystem continue to bleed money, with no respite in sight in FY23.
At least 55 (74 per cent) from 74 unicorns incurred a cumulative operating loss of $5.9 billion in FY22, according to leading startup covering portal Inc42.
Of those heavy loss-making unicorns, 14 were from the e-commerce sector, followed by fintech at 13, and consumer services at six unicorns, the report added.
While Swiggy incurred around $398 million loss in FY22, BharatPe reported $726 million operating loss in FY22.
Flipkart incurred $568 million loss and Meesho reported $422 million operating loss.
VerSe Innovation reported a loss of $343 million in FY22; ShareChat incurred $377 million and Unacademy $352 million, according to Inc42.
Another unicorn udaan incurred $229 million in FY22 operating losses.
The curious case of edtech major BYJU’s continues to haunt millions. The company reported an astounding net loss of over Rs 4,588 crore in FY21 on consolidated revenues of Rs 2,428 crore.
However, the company last year said it registered nearly Rs 9,991 crore in revenues in its FY22 financial results.
Meanwhile, BYJU’s is yet to file its FY22 results with the Ministry of Corporate Affairs (MCA).
Most of the leading Indian edtech startups have been bleeding money for months now.
Some of these loss-making unicorns companies are expected to launch their IPOs soon but with their income nosediving, the public market route to raise money and stay afloat has become all the more difficult.
Indian startups raised a total of $2.8 billion in funds in the first quarter of 2023, a massive 75 per cent decrease compared to the same period in the previous year ($11.9 billion), as rising inflation and interest rates continue to impact investments significantly amid a deepening funding winter.
There were no new unicorns created in the January-March period, compared with 14 unicorns in Q1 2022, according to the report by Tracxn, a leading global market intelligence platform.
The funding volumes contracted due to the reduction in late-stage funding, which declined by 79 per cent in the first quarter ($1.8 billion) compared to Q1 2022.
Early-stage rounds saw funding of $844 million, a drop of 4 per cent compared to Q4 2022 but a drop of 68 per cent compared to Q1 of 2022.
Late-stage rounds in Q1 of 2023 saw funding of $1.8 billion, a decline of 79 per cent compared to Q1 of 2022 and a 23 per cent drop compared to Q4 last year.
All eyes are now on top Indian startups/unicorns as they begin to reveal their FY23 results.
A memo from its CEO, David Mou said the cuts would affect employees across the company, including at headquarters and among clinical care staff and support workers….reports Asian Lite News
San Francisco, Oct 25 (IANS) SoftBank-backed digital mental health company Cerebral is laying off about 20 per cent of its staff as it restructures its business.
According to The Wall Street Journal, nearly 400 people will lose their jobs, primarily clinical staff and care counselors.
A memo from its CEO, David Mou said the cuts would affect employees across the company, including at headquarters and among clinical care staff and support workers.
“The changes are part of Cerebral’s ongoing transformation programme, which drives to create more sustainable growth and stability, while further delivering our mission to democratise access to high-quality mental health care for all,” a Cerebral spokesperson was quoted as saying in reports.
“These changes are focused specifically on realising operational efficiencies while prioritising clinical quality and safety across the organisation,” the spokesperson added.
The care counselors meet patients regularly to manage medications prescribed by clinicians and provide support.
The company has come under scrutiny for making it easier to provide Attention-deficit hyperactivity disorder (ADHD) medication to potential clients.
In April, a former Cerebral executive sued the company, alleging he was fired after voicing concerns about unethical prescribing practices and patient safety issues.
The San Francisco-based company has raised more than $426 million to date, and was last valued at $4.8 billion.
Earlier this year Cerebral laid off “hundreds” of people, primarily affecting its support and operations team to improve its programmes.
Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman
Start-up India programme shores up 60,000 startup projects including 75 unicorns …. Writes Kaliph Anaz
India has a very promising demographic dividend with 65 per cent of its population below 35 years. The potential of this youth demography is being fully tapped by various social sector schemes launched by the Indian government. The youth need right direction to achieve their ambitions. With this thinking, Prime Minister Narendra Modi announced ‘Startup India’ from the ramparts of the Red Fort on August 15, 2015.
Prime Minister Narendra Modi interacting with the youth and children from Jammu and Kashmir, in New Delhi (File)
After launching this flagship initiative of the Government in January 2016, he said, “My dream is, the youth of the country should not be a job seeker, but a job giver.”
Today the success story of more than 60,000 startups including over 75 unicorns highlights the success of this scheme.
“Wherever you look today, go to any family, no matter how rich a family maybe, an educated family, but if you talk to the young man in the family, what does he say? He goes out of his family traditions and says, I will start a startup. That is, his mind is ready to take risks. Today the startup culture is expanding even in small towns and I see signs of a bright future in it,” added Modi.
Mayur Patil, a resident of Pune in Maharashtra, was looking for ways to increase the mileage of his motorcycle in 2011 in which he subsequently succeeded. He used this technology which cut down emissions from vehicles by 40 per cent in 2017-18 and got it patented in 2021. After receiving a grant of Rs 90 lakh from the Atal New India Challenge, he is now running his own startup along with four of his friends.
In a big honour for the top India-origin tech prowess that has virtually taken over the Silicon Valley in the US, the Indian government on Tuesday awarded Padma Bhushan to Microsoft Chairman and CEO Satya Nadella and Alphabet and Google’s Sundar Pichai among the 17 awardees.
Similarly, Angad Singh, a resident of Ahmedabad, thought about starting his own venture. He launched an innovative website for transport goods. Impressed by his accomplishments many of his friends left their jobs to join him. Unlike in the past, there is now a shift in attitude as there is an endorsement for starting business ventures owing to favourable business conditions, instead of an emphasis on finding jobs.
In the regular jobs, definitely, there is more security and guaranteed salary without much hassle. But today when someone makes up his mind to start a business then he is encouraged by others close to him. This scenario has changed due to the Startup India initiative. In common parlance, startup means starting a new company.
According to the Department of Industrial Policy and Promotion (DIPP), a Central Government Department, “Startup is a company which is registered in India within 5 years and its turnover does not exceed Rs 25 crore in a financial year. Additionally, it is expected that these companies may be working in the field of innovation, development, commercialization of the new product, technology-based service, or intellectual property. The government gives incentives and proper platforms to companies including financial assistance under Startup India. The prospective entrepreneurs may register, share their business ideas or get their queries solved on the www. startupindia.gov site. The cutting-edge business ideas are duly acknowledged and promoted.”
Investment platform Groww, messaging bots startup Gupshup, digital pharmacy API Holdings Pvt., app developer Mohalla Tech and social commerce startup Meesho Inc are latest entrants, reports Asian Lite News.
It was an historic week for India’s technology industry as in the space of four days, the country minted at least six new startups with a valuation of $1 billion or more.
The investment platform Groww raised money at a valuation of more than $1 billion, messaging bots startup Gupshup hit $1.4 billion, digital pharmacy API Holdings Pvt. was valued at close to $1.5 billion, app developer Mohalla Tech surpassed $2.1 billion, social commerce startup Meesho Inc. also reached $2.1 billion and financial-technology provider Cred rounded out the blessing of unicorns at $2.2 billion.
Global investors such as Japan’s SoftBank Group Corp. and South Africa’s Naspers Ltd. see growing opportunity in the country’s startup scene.
India has long trailed well behind the U.S. and China in the amount of venture capital money invested in startups. The total value of deals in 2020 was $11.8 billion, compared with $143 billion in the US and $83 billion in China, according to researcher Preqin.
But several startups have emerged recently to signal the potential. Digital payments giant Paytm reached a valuation of $16 billion, making it the most valuable in the country, according to CB Insights. Online-education startup Byju’s is rasing money at a $15 billion valuation, Bloomberg News reported last week.
Flipkart, the e-commerce giant acquired by Walmart Inc. in 2018, is targeting an initial public offering in the fourth quarter that could value the company at more than $35 billion.
The report noted that the venture investments are helping to diversify India’s industry, long best known for tech services companies such as Tata Consultancy Services Ltd. and Infosys Ltd.
The Covid-19 pandemic has accelerated the adoption of online technologies in India, perhaps even more than in other countries. During the coronavirus pandemic and the stringent lockdowns of last year, more than 1,600 new startups were founded, taking the total in the country to over 12,500, according to a January report by Nasscom, the country’s technology industry trade body.
More than 55 of these are potential unicorns, the report said, what the venture industry refers to as “soonicorns.”
“The surge of funding and the breeding of unicorns is not a surprise because India has the third-largest startup ecosystem in the world and the third-largest market for such startups,” managing partner at 3one4 Capital Advisors LLP Pranav Pai was quoted as saying.
Pai said he knows of at least six new unicorns that will be minted in the next few months. While $20 million rounds were notable five years ago, startups are scaling very quickly and raising $100 million to $200 million rounds nowadays, he said.
Startups begin to shun Chinese investment
Paying heed to Prime Minister Narendra Modi’s call to build a self-reliant India amid the new normal, Indian tech startups have begun to shun Chinese investment as Indian corporates and wealthy individuals, along with investors from other countries, are funding desi companies more than ever.
In 2019, Chinese investors poured $3.9 billion into India, up from $2 billion in 2018. This investment scenario took a turnaround from May last year amid face-offs and skirmishes between Indian and Chinese troops at locations along the Line of Actual Control (LAC) in eastern Ladakh.
India rolled out a new policy last year to block “opportunistic takeovers”, requiring all foreign direct investment (FDI) from neighbouring countries to be directly approved by the government.
As a result, the investment from China in Indian companies fell down to $263 million across 15 deals in the first half of 2020.
The Indian tech startup base has witnessed a steady growth at a scale of 8-10 per cent (year-on-year) with over 1,600 tech startups and a record number of 12 additional unicorns added in 2020 — the highest ever in a single calendar year, according to the latest Nasscom-Zinnov report.
Sensing the atmosphere, homegrown tech startups have started to look around for investments within the country, and their calls have been answered.
In mid-March, the existing investors, along with a few prominent Indians, bought out Chinese venture capital firm Shunwei Capital’s minority stake in Twitter’s homegrown rival Koo’s parent company Bombinate Technologies.
