Flipkart, Byju’s boost Q3 VC funding as investments bounce back after falling for two straight quarters

Venture capital financing has finally bounced back in Q3 2020, after declining for two straight quarters, despite the economic downturn and Covid-induced lockdown. VC investments fell from around $5.9 billion in Q4 2019 to around $2.6 billion in Q1 2020 and further to $1.5 billion in Q2 2020 during the lockdown period. However, in the third quarter, it recovered to $3.6 billion, according to KPMG Venture Pulse Q3 2020 report. The investments were also up, though marginally, from around $3 billion in Q3 2019. The rise came primarily on the back of investments in large internet businesses including a $1.3 billion infusion of corporate capital into Flipkart and Byju’s $500 million funding.

“India continues to be attractive market for VC investors. With the impact of the pandemic and the new normal paving the way for disruption in business models, there is significant demand in the edtech, healthtech, and fintech segments,” Amarjeet Singh, Partner, KPMG in India. Edtech in India saw three big-ticket investments including $150 million raised by Unacademy, Eruditus Executive Education securing $113 million, and $100 million invested into Vedantu apart from Byju’s investment. Plum, Dozee, BestDoc, Eduvanz, Financepeer, FPL Technologies, Razorpay, etc., were some of the healthtech and fintech startups that raised capital during Q3 2020.

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“While funding is likely going to be on the rise in Q4 of 2020, investment is expected to pick up substantially again by the end of the year. Indian startups that have survived the slowdown and pandemic, are ready for the next level of growth and hence would attract funding as they have proved their mettle,” added Singh. India also saw some key announcements aiding India’s internet economy during the said quarter. For instance, Google’s $10 billion fund announcement in July to help accelerate India’s transition to a digital economy; Facebook, Google, and others investment into Jio Platforms, Jio’s acquisition of online pharmacy Netmeds in August, and more.

Along with VC investments in India, global VC funding during Q3 also increased to $73.2 billion across 4,861 deals from $70 billion across 5,674 deals in the preceding quarter. VC-backed exit activity also went up to $156 billion from $49.2 billion during the said period “nearing the record high of $171 billion set in Q2’19,” KPMG said. VC investment in pharma and biotech remained “very hot” in Q3 with total year-to-date investment in the sector stood at $31 billion, well above the total of $27.1 billion invested during the entire 2019.