- FinTech, EdTech and software as a service (SaaS) were the top 3 invested sectors in CY21
- Globally, the unicorn tally mark set to cross 1,000
Monday, 17 January 2022 – Indian startups had a blockbuster year with approximately USD 35 billion raised across 1k+ rounds in CY21. Q4 of CY21 was the second quarter where start-up funding crossed the USD 10 billion mark, making 2021 a remarkable year for the Indian startup ecosystem. As per the PwC India report titled, “Startup Perspectives – 2021 Year-end Edition” 43 Indian startups attained Unicorn status in CY21 taking the total private start-up Unicorn count to 68 by the end of CY21.
More than 50 startups show the potential to enter the unicorn club in 2022 taking the total India startup unicorn tally well beyond 100. Amit Nawka, Partner – Deals & Startups Leader, PwC India, said, “We can see that the base of the companies in the growth stage and late-stage deals have improved significantly in CY21, depicting a stronger base of companies having the potential to reach unicorn status. With market sentiments favourably inclined towards startups, and the large base of scaled startup companies at the end of CY21, we expect the startups unicorn tally to go well beyond 100 by the end of 2022.”
Startup Perspectives for Q4 of CY21 – A snapshot
- Ed-tech investments: While CY21 saw fintechs raise nearly four times more funds when compared to CY20, edtech startups came second, with almost 100 companies raising approximately USD 3.9 bn in CY21, a growth of 86% as compared to USD 2.2 bn raised in CY20. Edtech players already backed by investors in early CY20 have managed to ramp up their active user base and engagement rates significantly, resulting in a concentrated base of start-ups raising additional capital. UpGrad, Eruditus and Vedantu attained unicorn status in 2021, taking the tally of unicorns in the EdTech sector in India to 5.
- Stages of funding: Growth- and late-stage deals comprise around 85% of the total funding. Deals in all stages of funding showed growth in CY21 but growth and late-stage deals stand out with an approximately 50% growth in deal count and more than 2x growth in average deal ticket size. An increasing count of deals closed creates a larger base of Indian startups and increasing ticket sizes often lead to a rapid increase in company valuations. Sequoia Capital, Accel and Tiger Global were the most active investors in CY21, followed by Matrix Partners, Blume Ventures and others.
- Global and Indian unicorns: Globally, 510 new unicorns emerged in CY21, which was approximately 30% more than all 5 previous years combined. Almost 55% of all new unicorns are based in the United States. In India, 43 start-ups attained unicorn status in CY21 compared to 9 unicorns in CY20. There are now 68 privately held startup unicorns in India, primarily from Fintech, SaaS and D2C. More than 50 Indian startups show the potential to enter the unicorn club in 2022 and most of these startups are in the Fintech, Logistics Tech and SaaS segments.
- M&A in the startup ecosystem: In 2021, close to 250 M&A transactions happened in the start-up ecosystem, which is a big jump from earlier years. M&A’s in the start-up ecosystem were fuelled by new business models with M&A at the core of their business strategy, large startups acquiring capabilities and market presence and large corporates making significant bets – notably the Tata and Reliance groups. Four out of the top 10 startup acquirers in 2021 have been roll-up ecomm companies – Mensa Brands, Global Bees, Curefoods and 10club.
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