According to KPMG’s report, the count of startups has increased to 50,000 in India. The rise in startups has stemmed two benefits, namely escalated Indian business ecosystem and bringing in investors from across the globe. Flipkart-Walmart deal was a major business transaction, which stimulated investors’ interest in Indian startups.
According to data tracker, Venture Intelligence’s reports: in the current year, there are 292 deals of investments, which are 44.4 per cent higher from $2.7 billion investments received by the Indian firms in 2018.
What Investment Numbers Say
As per data reports, the increasing figures of startup investments when compared to investments made in 2016 and 2017, show that there is an increase in capital allocation in the last six months.
In the data report, investments, which are made by venture capital firms, are considered as seed or Series F deals in startups running for less than 10 years.
Recently, consumer internet firms have begun raising capital and likewise, business-to-business (B2B) companies in sectors such as logistics, software and marketplaces are also raising money now, as reported by the Indian daily news, Mint.
How Walmart’s Acquisition of Flipkart Enticed other Investors Globally
In May 2018, US-based retail company, Walmart acquired 77 per cent stake in the Indian e-tailer, Flipkart for a sum of $16 billion. The transaction happened after months of discussion between both the parties. Further, the deal was considered as one of the biggest acquisitions of an etailer company, as reported by Indian daily news, The Economic Times.
The acquisition comprised $2 billion of fresh offerings which increased the valuation of Flipkart to $22 billion. The move was essentially done to compete against the e-commerce platform, Amazon.
The transaction, in turn, helped to bring investors into the Indian startup ecosystem. Following the Walmart-Flipkart deal, the investors, who were stakeholders of Walmart, soared their investments by 1.5 to 10 times after the exit of VC firm, Accel Partners, Naspers, Softbank Group and Tiger Global Management, as reported by the above-cited reports.
Soaring Startup Funds
In the last five months, there have been 10 significant deals, which crossed over $100 million that were higher than the previous year’s (2018) numbers and also from 2017.
According to Tracxn, a data tracker, “The year 2019 has so far seen 10 deals of $100 million or more, higher than the seven deals for the first half of 2018 and five deals for the first half of 2017.”
The primary cause of thrust in the investment sector is that investors are moving away from the big companies, which conduct giant fundraising charts yearly.
More so, valuations of the companies have risen in the present time, thus, producing more benefits for the investors as well as startups.