Fewer New Global Investors Back Indian Startups This Year
As a result of raging pandemic leading to an uncertain environment, the year witnessed a fall in number of new global investors funding the Indian startups, as compared to 2019. The number of new overseas investors fell to 24, from 71 last year.
Countries like Germany, South Korea, Hong Kong and Switzerland from where investors were observed backing multiple startups last year, didn’t witness any such commitments this year. Investment from Chinese investors also fell from 5 last year to 2 since the change in investment norms from which India shares land border with.
Analysts however, believe that the pace of overseas funding would improve by next month particularly in the field of fitness, gaming, agri-tech and fitness with more interest from investors from southeast and West-Asia. Investors have begun showing interest as more and more Indians are adapting to the internet amid the pandemic.
Nitish Poddar, partner and national leader, private equity, KPMG in India said that impact of pandemic played a huge role in change in the investment behavior. However, there has been a continued interest in Indian Startups. As shopping and learning moved online, Ed-tech witnessed a huge traction apart from e-commerce. Software as a service (SaaS), e-business to business and logistics has also been attracting investors as these markets showcase a huge potential.
Since many Indian startups are backed by Chinese investment, the ban on Chinese apps along with additional policy change in Chinese investment has impacted Indian startups. Yet there has been a greater investment interest either directly (through sovereign funds) or by co-investing with local fund from South-east Asian, Middle-east regions.
While American investors have always favored India and have always continued to lead the investor pack, the investor class is gradually becoming more diversified. Considering the environment and growth prospects of India in the post pandemic world, many investors will look forward to allocate their funds into the Indian market.