Unexpected things that defined the Indian startup ecosystem in 2021 | India Digest Volume 80

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This week was mainly devoted to looking back on the past year and analyzing the changes that have occurred in the ecosystem of Indian startups. 2021 has turned out to be a pivotal year for the local startup community that has seen it all: record inflows, unprecedented numbers of startups entering the unicorn club, and startups going public.

For the background, local startups raised nearly $ 36 billion in 2021, 200% more than last year. 41 startups turned into billion dollar companies after landing big checks from big-name investors like Tiger Global and SoftBank. Meanwhile, a slew of top tech startups have gone public, successfully proving the public market’s appetite for new age businesses, pleasantly surprising local startups and the VC community.

In the midst of all of this, local consumer tech startups began to take an interest in overseas markets and create products and services for the global audience. As the Indian startup ecosystem matures, industry experts expect massive capital inflows to continue and the exit market to remain rosy.

In the last bulletin of 2021, KrASIA took a look at the past year from different goals.

The big read

Unexpected things that defined the Indian startup ecosystem in 2021 | KrASIE Year in Review

For the Indian startup ecosystem, 2021 couldn’t have been more different from 2020, the year of the COVID-19 epidemic that changed the world forever.

Last year, the local startup community brought to their knees, forcing them to focus on sustainable growth with reduced liquidity and better unit economics rather than pursuing growth rather than profitability, a practice that had defined the startup industry over the past decade. Start-up entrepreneurs progressed as they weathered the downturn caused by the public health pandemic. Getting back to basics, they learned to do more with less and found ways to build fail-safe businesses.

At the end of 2020, two events occurred that set the stage for this year: the rapid mass digitization in the South Asian country and the rebound in venture capital funding.

Despite the overhang of the health crisis, 2021 is proving to be a pivotal year for the ecosystem of Indian startups. As mainstream internet startups thrived on the backs of hundreds of millions of Indians devouring online content and services and transacting more than ever before, they raised exorbitant capital and grew even faster.

This led to VCs writing bigger checks at higher valuations. Overall, this year, investors pumped nearly $ 36 billion into startups, 200% more than in 2020, which created 41 unicorns. As investor sentiment was at an all time high, a slew of startups took the call and decided to go public in a bull market, which made global investors even more excited.

As 2021 draws to a close, KrASIA looked beyond the obvious at the unexpected things that have defined the local startup ecosystem this year.

The weekly buzz

1. KrASIA looked new emerging sectors that shone in India in 2021. These include crypto, fast trading, and D2C, all of which have seen a rapid increase in consumer interest and a massive influx of capital this year. While crypto startups have raised $ 485 million from private equity and venture capital funds this year, D2C brands and companies have seen investors pour $ 1.7 billion in the first three quarters of 2021. From moreover, the fast-paced commerce space has become the new battleground for e-grocers, e-merchants and hyperlocal players.

2. Snapdeal, Backed by SoftBank, Aims to Raise US $ 165 Million From IPO, Considering International Expansion. In a draft prospectus filed earlier this week, the online retailer said its offering would include a new issue of shares worth up to INR 12.5 billion ($ 165 million) and existing investors selling up to to 30.76 million shares under the offer to sell. Although the company has not disclosed the full size of the IPO, it is believed to be a public offering of $ 250 million. Snapdeal plans to use INR 9 billion ($ 119 million) of the IPO proceeds for organic growth initiatives over the next five fiscal years.

3. Indian millennials buy now and pay later for a uncertain economy. They are increasingly using BNPL (buy now, pay later) services to disburse online purchases, be it food or travel tickets. A report from the RedSeer market researcher predicts that the BNPL industry in the country will more than increase tenfold over the next five years, becoming a $ 50 billion market by 2026 from $ 3.5 billion currently. The number of users of BNPL services is estimated at 100 million, compared to 10 to 15 million today.

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