Indian startups witnessed a strong year in 2021, and the momentum is set to continue in 2022, with more than 50 startups in line to turn unicorn - or startups valued at more than $1 billion, taking the total tally well beyond 100 in the current year, a PwC India Report said on Monday.
While fintechs raised nearly four times as much capital in CY21 as they did in CY20, edtech startups came in second, garnering about $3.9 billion in CY21, an increase of 86% over the $2.2 billion raised in CY20. Edtech firms that had previously received funding from investors in early CY20 were able to considerably increase their active user base and engagement rates, resulting in a concentrated pool of startups seeking more funding.
Around 85% of funding goes to growth and late-stage deals. In CY21, deals at all levels of fundraising grew, but growth and late-stage deals stood out, with a 50% increase in deal count and more than 2x increase in average deal ticket size. As the number of deals closed rises, so does the number of Indian startups, and larger ticket sizes frequently contribute to a quick rise in company valuations.
“We can see that the base of the companies in the growth stage and late-stage deals have improved significantly in CY21, depicting a stronger base of companies having the potential to reach unicorn status. With market sentiments favourably inclined towards startups, and the large base of scaled startup companies at the end of CY21, we expect the startups unicorn tally to go well beyond 100 by the end of 2022,” said Amit Nawka, Partner – Deals and Startups Leader, PwC India.
The year also witnessed 250 M&A deals, a significant increase from previous years. New business models with M&A at the core of their business plans, large startups acquiring capabilities and market presence, and large corporates making significant stakes – notably the Tata and Reliance Groups – all fueled M&A in the startup ecosystem. Thrasio-style roll-up ecommerce firms accounted for four of the top ten startup acquirers in 2021 - Mensa Brands, Global Bees, Curefoods, and 10club.
