Total Funding Received By The Startups Of India In The Year 2021-2022

Total Funding Received By Indian Startups Of India In The Year 2021-2022

Indian startups raised more than USD 11.8 Billion across 506 funding deals in January to April resulting in USD 53.8 Billion. As the first quarter of 2022 ends, we are observing two large trends in Indian startup funding. The overall funding in the first quarter of 2022 is significantly higher than last year’s. As per the last year’s data released by Fintrackr, total investments that pumped into Indian startups were nearly USD 38 billion in 2021 which was USD 11.1 billion in total funding that startups received during 2020. Fintrackr’s data further publishes that 1,391 startups mopped up USD 37.98 Billion across 1,625 deals in 2021 that includes 380 growth and late-stage startups and 948 early-stage startups. Among them 297 startups, mostly early-stage, did not share their deal size.

But this year's funding broke all previous records, Indian startups raised more than USD 11.8 Billion across 506 funding deals in January to April resulting in USD 53.8 Billion. Essentially, funding grew almost 186% this quarter as compared to last year. The deal count also soared by an immense 64% in the first three months of 2022 against Q1 of 2021. India saw 46 unicorns last year which rose to 90 this year. These include ShareChat, Cred, Meesho, Nazara, Moglix, MPL, Blinkit, upGrad, Mamaearth, GlobalBees, Acko, Spinny. India with 90 unicorns has become the third largest unicorn hub after the US with 487 and China 301 additionally India has the third largest startup ecosystem in the world with nearly 60,000 startups.

Bengaluru has the maximum number of unicorns. Fintech, e-commerce and SaaS, software as a service have seen the maximum number of unicorns, while health-tech, ed-tech, D2C, Gaming and Crypto are also in the race.

The most valuable unicorn is Flipkart with USD 37.6 billion after raising USD 3.6 billion in July 2021, while Mensa Brands was the fastest to turn unicorn; it took only 6 months to turn unicorn in November 2021 round after raising the first USD 50 million rounds in May 2021.

India has made out four major decacorns (companies with a valuation of USD 10 billion or above) so far they are Flipkart, Paytm, Byju's and Oyo Rooms.

In terms of segments, fintech was the highest one with 186 deals in which startups raised around $5.07 billion. But, the total amount of investment raised by edtech startups during the year was higher at $5.78 billion across 141 deals. D2C, SaaS and healthtech were the top five funded segments in 2021.

11 Indian startups along with 8 unicorns raised nearly USD 7.16 billion through public offerings. Paytm, which is Fintech, raises India's largest ever IPO with an issue size of INR 18,300 crore which means about USD 2.46 billion.

Further, Zomato, the Foodtech Company, has the highest market capitalisation USD 14.8 billion, among the listed Indian startups, followed by Nykaa USD 13.5 billion and Freshworks USD 6.9 billion.

Leaving behind taboos of male dominating society India gets 13 female unicorn founders, 8 out of which have emerged in the year 2021  Falguni Nayar (Nykaa), Gazal Kalra (Rivigo), Ruchi Kalra (OfBusiness), Divya Gokulnath (Byju's), Ghazal Alagh (MamaEarth) and Saritha Katikaneni (Zenoti) were among others.

Introduction to Startups

We all are familiar with the term “startup”. However it is frequently used during the Modi government. Let’s first understand the meaning more clearly. They are the companies whose prime focus is to launch a single product or service in the market. They don’t have much capital to invest. Mostly the investments are made by founders, their sources could be loans, venture capitalists, family and friends or crowdfunding. Secondly, they don’t have a full-fledged business model. Failure risks are higher on the other hand they can come up with great benefits leaving a legacy for upcoming generations. First few years are very complex for startups to focus on raising capital and developing the business model.

For a lay man business is merely a risk. Some Business Warriors blissfully take the challenge. The good part is that the start-ups are very hassle-free, the workplace is comfortable, and hours of work are supple, one gets to learn new things.

Everything comes up with its pros and cons. If we magnify its darker side then start-ups are a huge risk and there are high chances to fail. Antagonism is common because others are also working on the similar line.

Importance Of Funding

When we talk about start-ups, we can’t miss another important terminology called Funding. Before I go further I must brief you what Funding is. It is the capital which is needed to set up and run a business for product development, manufacturing, expansion, sales and marketing, stock and inventory, office spaces, miscellaneous expenses etc. It is a lifeline of any business. Salaries, bills, insurance have to be paid. The initial period of a business generates little returns, for this reason funding is required. Then expansion, when a business begins to develop new locations, products, and market research becomes another prerequisite. These day to day activities add to existing costs and need further funding.

Types Of Funding

Funding is an elaborative terminology.

Pre-Seed Funding

This is a stage when a new company is born at this juncture company's founders first receive their operations off the ground. Here the founders themselves, close friends, supporters and family members put in the money.

Seed Funding

Seed funding is the foremost official equity funding stage. It signifies the first official money that a business ventures or enterprises raise. Seed funding supports a company to finance its initial steps, like market research and product development. With this a company gets assistance in identifying how the final products will be and who is the target demographic. The most common type of investors participating in seed funding is called "angel investor." They appreciate riskier ventures like startups with a proven track record and expect an equity stake in the company in return of investments made by them.

While seed funding rounds vary in terms of the amount of capital they generate for a new company, it's not uncommon for these rounds to create from USD 10,000 up to USD 2 million for the start-up. For some a seed funding round is all that the founders feel is necessary in order to successfully get their company off the ground; these companies possibly will by no means engage in a Series A round of funding. Most companies raising seed funding are valued approximately between USD 3 million and USD 6 million.

Series A Funding

Once the business is established and develops a rising track record, consistent revenue figures, strong user base and some other key performance indicator then the doors for Series A funding opens up automatically. They get new opportunities to extend the product in respective markets. This is a very crucial stage. It's essential to have knowledge and a proper plan to develop a business model that will generate profit in coming years. Most Series A rounds raise approximately USD 2 million to USD 15 million. Now the numeric has increased due to high tech industry valuations, or unicorns. In Series A funding, investors don’t look for great ideas but for a strong strategy to turn that idea into a successful, money-making business. For this reason, it's common for firms going through Series A funding rounds to be valued at up to USD 24 million. Only one single investor may serve as an "anchor." Once a company secures its first investor, it is easy to attract additional investors.

Series B Funding

When the business goes to the next level, Series B rounds come in the picture. The investors help startups to expand their reach in relevant markets. Companies that have passed through seed and Series A funding rounds this means they have already developed sizable user bases and have verified to investors that they are now ready to hit success on a bigger scale. Series B seems similar to Series A in terms of the processes and key players. Series B is often led by many of the same characters as the previous round, including a key anchor investor that brings in other investors.

Series C Funding

When the business is awfully well, it enters into Series C funding sessions. These companies look for extra funding to build up new products, expand into new markets, in some cases to acquire other companies. In Series C rounds, investors infuse capital into the successful businesses to receive more than double in return. Series C funding focuses on scaling the company, growing as quickly and as successfully as possible within no time.

One possible way to scale a company can be to acquire another company. As the operation gets less risky, more investors come to play.  In Series C, investment banks, private equity firms, and large secondary market groups escort the investors. The motive behind this is that the company has already proven itself to have a successful business model, these new investors come to secure their own position as business leaders. The company ends its external equity funding with Series C. However, some companies go for Series D and even Series E rounds of funding as well. Companies gaining up to hundreds of millions of dollars in funding through Series C rounds are prepared to develop on a global scale. They utilize Series C funding to help boost their valuation in the hope of an Initial Public Offerings. At this point, companies enjoy higher valuations. Companies involved in Series C funding should have established, strong customer base, revenue streams, and proven histories of escalation.

World has gone through its toughest phase because of a pandemic during a couple of years, the economy was slowly improving but again it hit us with its new version called Omicron. Despite challenges and hurdles, Indian growth in start-ups has created a milestone by becoming the third largest start-up in the world in just a quarter of the existing year and the economy is getting on track year after year.