Indian startups raised a record $10 billion in venture capital in 2019, driven by new sectors and emerging winners, despite a sentiment shift towards caution during the last quarter of the year. Startups, or firms less than 10 years, raised $10 billion in equity, higher than the $9.6 billion and $9.1 billion in 2018 and 2017, respectively, though these were also record amounts. Investors deployed capital across sectors, from e-commerce and lending to emerging sectors such as social commerce and enterprise software for select industries. The rise of business-to-business (B2B) startups, across sectors from e-commerce to fintech and software, was also a large investing theme. Out of the $10 billion, B2B firms raised $4 billion, the highest ever percentage (40%) and a jump from the 25% share from last year, when B2B firms had raised $2.3 billion out of a total $9.6 billion. Large investors, such as pension funds and hedge funds, are also investing earlier in startups, showing increased interest. “Large foreign funds which were mainly visitors are making discovery trips and tracking deals earlier, which is a good sign. The percentage of deals that close may be lower, but their presence and share of capital allocated to India is rising,” said Nath.

(Dealstreet Asia)