- Growth stage funding boom is due to new investors in this space rather than broad-based funds, say investors
- The funding boom comes in the face of a macroeconomic slowdown in India, and an internet funding slowdown in China and the US
Mumbai: Startups breach investments crossed the billion-dollar mark in the September quarter and hit a four-quarter high, driven by a handful of investors deploying capital more aggressively than ever, data indicates.
Series B and C rounds, generally defined as the growth stage for startups, saw $1.13 billion in funding in the September quarter, more than double the capital raised two quarters ago, and 33% more than the $848 million raised last quarter, according to Venture Intelligence, a startup data tracker.
According to investors, the growth stage funding boom is due to a number of new dedicated investors in this space, rather than broad-based funds, as well as existing investors, such as Tiger Global, Steadview Capital and Ribbit Capital becoming more aggressive this year, after a hiatus or selectively investing in the last few years.
Till about a few years back, the same set of venture capital (VC) funds would invest across multiple stages. As it has happened in other large venture markets, several Series B and C specific funds like A91, B Capital, Epiq, Fundamentum, Vertex, Avtaar, Iron Pillar etc have now emerged in India,” said Rahul Chowdhri, partner at Stellaris Venture Partners, an early stage investor.
“In addition, several Series A companies over the last couple of years have scaled very well which has attracted the attention of several global investors. Both these factors have led to an increase in B/C investments,” he added.
The growth stage boom has been one of 2019’s biggest funding themes.
Growth stage investments in Indian startups breached the billion-dollar mark in the first half of this year, Mint reported on 8 July. However, this time, funding crossed a billion dollars in a single quarter.
To be sure, despite more investors and capital coming in, the deal pipeline does not seem to have broadened, with only 40-45 growth deals in each of the last eight quarters, the data indicates. This is in contrast with the general expectation that as the ecosystem matures, more founders and companies will come in.