Mumbai: Venture capital (VC) is increasingly entering the big league with a marked surge in funding rounds upwards of $100 million, data shows.
VC funding in the third quarter of 2018 doubled to over $2.5 billion compared to the previous quarter, driven by hotel booking start-up Oyo’s $1 billion funding, according to a report from consultancy KPMG.
The bulk of VC funds raised by Indian technology start-ups in the third quarter came from “mega rounds" of $100m or more, including a DST Global-led investor consortium putting $225 million in Udaan, an online marketplace for businesses founded by Flipkart employees, a $120-million fund-raise by health and wellness start-up CureFit, and a $100-million round by entertainment ticketing platform BookMyShow.
Online marketplaces continued to gain traction as well, with second-hand car company Cars24 raising $50 million. In the second quarter, Droom raised $30 million led by Toyota and Tokyo-based VC firm Digital Garage. It also raised a $30 million round last week, led by the family office of Japanese investor Joe Hirao.
The report said that the Indian figures buck the trend of strong investments in Asia, which returned to stable investment levels in the third quarter after a record second quarter led primarily by China’s Ant Financial’s $14 billion fund-raise.
According to Nitish Poddar, partner and national leader, private equity, KPMG India, consumer-led internet businesses will see significant growth in the near future on the back of the working age proportion of India’s population.
“Internet commerce is at an exciting stage in India. Mobile penetration driven by strong demographics is what will drive growth in the industry. Food, travel, commerce and auto are some of the spaces to watch out for," he said. “Fintech is also at a very exciting stage. The government’s push to electronic money, coupled with growth in e-commerce, will see significant growth in this space, and payment gateways, online insurance and micro loans will stand to benefit."
Nine of the top 10 deals in the Asia-Pacific region in the third quarter came from China, with India’s Oyo being the only non-Chinese company in the list. Globally, venture-capital backed companies raised $52 billion across 3,045 deals, with North and South America accounting for more than half, or $28.9 billion across 2,056 deals.
A surge in Hong Kong-listings also increased venture-backed exits to about $225 billion, the highest since 2014. However, the number of exits was the lowest in 8 years.
“Across the globe, median venture capital deal sizes continued to steadily increase across all stages, reaching new heights in 2018," said Arik Speier, partner and co-leader, KPMG Innovative Startups Network. “Continued rise of corporate participation and ever increasing market sizes may continue to drive investment for some time to come."