Prominent US-based seed money startup accelerator Y Combinator was the top startup investor in Q1 2021 regarding the number of investment rounds. The accelerator-cum-investor, which had earlier backed Indian startups such as ClearTax, Innov8, Meesho, RazorPay, others, participated in 30 games vis-à-vis 15 matches during the year-ago period, according to the data from research firm Tracxn. On the other hand, startup investment platform LetsVenture was the second leading investor with 12 rounds during the quarter. More considerable startup funds such as Sequoia Capital and Accel Partners had made 11 and 10 rounds respectively during the said quarter, even as the year-ago round volume was higher at 22 for Sequoia and 13 for Accel. This was reflected in the round book contracted 27 percent from 504 rounds in Q1 2020 to 368 in Q1 2021. Likewise, the startup funding value also witnessed a 12.6 percent decline from $5.40 billion to $4.72 billion during the said period.
Early-stage investment, which usually records maximum deal rounds compared to mid and late-stage investments, saw the highest number of games at the seed stage. 204 bands were recorded at seed level, while 54 matches were made at the Series A stage. In terms of the deal value or funding, $1.1 billion was invested at the Series C round, followed by $975.59 million at Series C and $939 million at Series F during the first quarter of the new calendar year.
The month-on-month growth during Q1 2021 increased from $749.64 million invested across 121 rounds in January to $1.77 billion in 118 games in February, followed by $2.20 billion in 129 matches in March. According to data from Venture Intelligence, private equity and venture capital funding in India increased around 85 percent from $6.54 billion in Q1 2020 to $11.85 billion in Q1 2021, led by investments in startups such as Zomato, Byju’s, and Dream11. The deal volume had declined 21 percent to 199 in Q1 2021 from 244 in Q1 2020.
“Startups are essential for India to become a $5-trillion economy. They bring innovative models and thereby create products and services that may not have existed earlier…they bring in creative destruction in the economy, and in any capitalist economy creative destruction is extremely important,” Chief Economic Advisor of India Krishnamurthy Subramanian had told Financial Express Online in an interview recently.