Early-stage dealmaking hits a crescendo as investors flock to India

India’s early-stage startups raised more capital in October-December 2021 than all of the fundraising in 2020, according to a CB Insights report.

As many as 533 deals worth $10.3 billion were struck in the three months ended Dec. 31, 2021, in what was among the best quarters for early-stage dealmaking in the last six years, data from the annual CB Insights State of Venture report showed.

Here’s a quarter-by-quarter breakdown of dealmaking in 2021:

• January-March: 333 deals worth $4.1 billion
• April-June: 344 deals worth $6.2 billion
• July-September: 526 deals worth $9.9 billion
• October-December: 533 deals worth $10.3 billion

The year, in all, was an outlier with more than $30 billion—the highest so far—being raised by early-stage and growth companies. Of this $30 billion, almost 74% of funding flowed into early-stage startups, a rarity and a reversal of trend where mega billion-dollar deals cornered larger share of deal volumes till date. Further, the data shows that 10% of the total funding went into mid-stage deals and almost 13% into late-stage deals.

Also Read: 2021 In Review | Indian startups bag record $36 billion funds in 2021

Clearly, most top venture capital funds have made a conscious shift to fund early-stage startups to create a healthier pipeline of deals, going forward. From Sequoia to Matrix, most top funds started their seed and pre-seed programmes to curate early deal flow for the firms.

The year of the unicorn
According to the CB Insights report, 46 unicorns—private companies with a valuation of $1 billion or more—were minted in 2021. That aside, as many as 11 Indian startups—including eight unicorns—launched their initial public offerings last year, raising a cumulative $7.16 billion, a report by Orios Venture Partners shows.

“Despite witnessing an economic downturn in the first half, it has been an exciting and tremendously promising year for tech startups,” said Rehan Yar Khan, managing partner at Orios Venture Partners. “In terms of measuring scale for the ecosystem, our report is a clear validation of the value creation that has been achieved through innovation in technology, both in terms of IPO and unicorns.”

Also Read: 2021 Year in Review | The Year Of The Unicorn

The average time taken to achieve a billion-dollar valuation reduced to 7.8 years in 2021 from 9.9 years in 2020. Serial entrepreneurs are more likely to turn their companies into unicorns.

Mega deals in October-December 2021
According to the CB Insights report,

• Dream11, operated by Dream Sports parent Sporta Technologies, raised Rs $840 million in a Series F round at a valuation of $8 billion in November 2021.
• Razorpay, a payments processor for new-age digital businesses, raised $375 million in a Series F funding round in December 2021, at a valuation of $7.5 billion.
• OfBusiness, a business-to-business commerce startup, bagged $325 million in Series G funding in December 2021, at a valuation of nearly $5 billion.
• Edtech major Byju’s raised $300 million in a Series H funding round in October 2021. The company’s valuation jumped to $18 billion.