Despite geopolitical tensions halting Chinese investment, around 59 international investors made their first-time PE-VC investment in India in 2020, according to data analysed by consulting firm Praxis Global Alliance. This is a 37% rise in the number of global first-time investors who invested in Indian startups, given that the corresponding number stood at 43 in 2019.
Not only did Indian startups attract more foreign investors, they also saw larger bets and raised greater capital for the ecosystem in 2020. The top 10 new global investors in 2020 participated in around $7 billion worth of deals, while this was only $1.2 billion in 2019, data showed. This includes co-investment by other players in the same deals.
There were sovereign funds like Saudi Arabia’s Public Investment Fund, which pooled almost $4 billion into RIL’s fund-raising for its group companies. Other instances of global firms tapping India included Luxor Capital Group’s investment in Zomato, Alkeon Capital’s backing of Byju’s, and South Korea’s NXC Corporation investing in DMI Finance.
International investment came in from over 15 countries. Of these, 60% investors had their headquarters in the US, followed by 7% who had their headquarters in Japan and South Korea each. The Middle East region was another major investor base. The investment deals by such first-time international backers were highest in consumer apps and platforms (14 deals) followed by Software-as-a-Service (SaaS) & Artificial Intelligence (AI) at 11 deals.
Praxis Global Alliance managing partner and CEO Madhur Singhal said Indian internet companies are scaling up rapidly, prompting global investors to participate in the ecosystem’s growth. “Also, many experienced India fund managers at global investment firms who understand the nuances of the startups here have turned entrepreneurs and set up their own funds,” he added.
As of December 2020, India was home to 37 unicorns with 14 companies making it to the elite list in the pandemic year alone.