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Average ticket-size of late-stage tech deals at all-time high: IVCA-EY Report

Looking at the overall sector-wise trends and deals in the respective sectors, Fintech topped the charts with 61 deals followed by edtech with 42 deals

2020 has provided tailwinds to digital adoption. The digital maturity of the Indian enterprise has jumped almost 2X while the internet penetration has expanded to 750Mn+ subscribers. Uncertainty and rapid experimentations have shifted the founder mindset and a new playbook is emerging for the post-COVID world. Collaboration, employee experience, frugality, and global expansion are key to founders today.

According to recent data released by the Indian Private Equity and Venture Capital Association (IVCA) and EY in the State of Indian Markets: Investment Environment (Startup) Report, the average ticket size of late-stage tech deals is at an all-time high so far in 2021, as compared to the last two years, whereas, in terms of the number of deals, the early-stage deals saw a significant dip of almost half (245 deals in 2021) of where it stood in 2019 (498 deals). Looking at the overall sector-wise trends and deals in the respective sectors, Fintech topped the charts with 61 deals followed by edtech with 42 deals.

A total of 500 deals have added the total amount of VC funding to $17.2 bn in the first half of 2021 compared to a total of $11.1 bn in 2020; there have been many deals above $20mn this year, the year has also seen a higher velocity of funding into startups by VCs.

Karthik Reddy, Vice Chairman of IVCA, and Managing Partner of Blume Ventures said “2021 has unfolded into one of the most unexpected and aggressive phases of consumer and business adoption of digital, spurring the urgency amongst entrepreneurs, and financial and strategic investors to rapidly double down on their digital forays. It promises to be an unprecedented decade of growth for digital and tech businesses in India,”

India has ranked third in terms of a total number of unicorns in 2020 and has emerged as the new home of unicorns, with 21 new ones added in the first half of 2021. Simultaneously, the potential pipeline expanded by 1.5x and almost 8% of global unicorns have a technology center in India. Investments have rebounded strongly with start-up investments in 1H2021 which is already surpassing total investments in 2020. 135+ corporates are actively participating in investing, acquiring or partnering with start-ups. Currently, investments and M&A recovery are in line with global trends.

“2021 has so far been a landmark year on multiple fronts – fund inflows, a groundswell shift to online services, IPO/exits becoming a reality, and increase in the M&A for scale and skill. While the investment activity has accelerated, there is a need to have a metered approach to build long-term sustainable businesses and shareholder value,” said Ankur Pahwa Partner E-commerce and Consumer Internet leader – EY.

Positivity pervades across the system, which is enabling continued interest amongst all stakeholders in the ecosystem. With a focus on ‘Atmanirbhar Bharat’, there are emerging playbooks that are helping engage and unleash the potential of the ecosystem. Indian companies are exploring global opportunities, which is also attracting a greater level of interest. Tier 2 cities continue to lead the way – not only in adoption but also in startups. It is also important to say that there is a gradual shift from addressing urban challenges.

Source: Business World

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