VC investments in India decreases to $2.2 bn in Q1 2020

According to KPMG’s latest Venture Pulse report, Venture capital investments in Indian startups have fallen sharply to $2.2 billion in the first quarter of the calendar year 2020. It reflects the tough going for businesses in the pandemic-induced economic downturn.

At the end of the Q4’2019, VC investments in India were quite strong, the number as high as $6 billion. The startups had closed mega deals including a $1 billion funding round by Paytm and a $500 million round by Udaan. Overall, Indian startups had raised $14.5 billion across 887 deals in 2019. Globally, VC-backed companies raised $61 billion across 4,260 deals in Q1 of 2020.

Initially, India was not as affected by COVID-19 in Q1’20 compared to China. Concerns related to the pandemic grew later in the quarter, due in part to the fact India receives a significant amount of VC investment from international VC firms and corporates. While the pipeline for deals is expected to remain relatively robust in India, deal flow is expected to become very slow, particularly in Q2 of 2020. China bore the maximum brunt of COVID-19’s impact throughout Q1’20, as evidenced by its drop in total VC investment to a twelve-quarter low, and a drop in the number of VC deals with a level not seen since Q4’14. Meanwhile, VC investments in the US and Europe remained strong during the same period. 

The report also mentioned that despite all these challenges, India saw a number of good-sized deals. The majority of the mega deals were sealed by edtech startups led by Byju’s raising $400 million, Unacademy raising $110 million, and Aakash Educational Services announcing its acquisition of Meritnation. Mobility startup Bounce has also bagged a $ 150 million funding round in 2020.