On 17 November 2018, the IIMAAA Chennai Chapter hosted an exclusive session for our alumni with Arun Natarajan, Founder & CEO of Venture Intelligence.
We had had the pleasure of hearing from Arun three years ago in 2015 when VC funding was at its peak, and we looked forward to learning more about the gamut of changes in the industry since then.
The session was insightful and a great learning experience for some of our more entrepreneurial alumni. Arun provided us with a statistics-backed analysis of the landscape of VC in India, touching on key trends and hot areas for investment.
With over a thousand startups founded in India each year, there is a lot of competition in the space. It’s interesting that over 40% of these startups are based in non-metros. Since 2016, the number of VC funds in India remains steady at 260, with Accel India leading the number of deals (19), followed by Blume and Sequoia (15 each). Asian VC funds led by Softbank have become dominant players in the Indian market.
While VC funding had reached a peak of USD 2.1 Billion in 2015 (through several smaller deals), it showed a steep decline in the subsequent years and was finally picking up in 2018 (with few large deals dominating the landscape). Over the years, VCs have become risk-averse with a drastic reduction in Seed and Series A rounds, and Series C and D round gaining traction.
eCommerce companies are the hottest in the market, attracting the lion’s share of the funding, while Fintech and Healthcare startups come in next. New age startups in Artificial Intelligence and Ed-Tech are experiencing the fastest growth in the funding arena.
After a lull in 2017, the year 2018 boasts of 8 unicorns. In the last year, companies with unique value propositions and limited competition have managed to raise mega-funding rounds – prime examples being Oyo, Ola, Swiggy and Udaan. Paytm was added to this list of unicorns through the surprise deal with Berkshire Hathaway.
The Flipkart exit (with its superlative multiples) single-handedly made 2018 a stand-out year for early investors. A few smaller exits from Ola, Saavn, Zomato, etc also reassured investors with excellent multiples, allaying fears raised by skeptics regarding the illiquid nature of these investments coupled with unviable valuation metrics.
The session concluded on a high note with Arun showcasing the scientific, data-driven, meritocratic nature of the VC industry which provides essential risk capital to entrepreneurs, and is the backbone of the startup ecosystem in India.
