Unicorns clear the way for decacorns; deal activity skyrockets in Q3

As the startup world moves on from ‘unicorns’ to ‘decacorns’ India is keeping apace with two privately-held firms, Byju’s and Paytm, making it to the list of the latter. A decacorn is a business valued at more than $10 billion.

At present, 38 private start-ups (4% of the total number of unicorns) attained decacorn status globally and most of them are FinTech startups. Three decacorns were born in 2021 which are all from China and Hong Kong.

But the sky is the limit as creating a new benchmark, ByteDance—a Chinese multinational—also privately-held is a ‘hectocorn’, worth more than $100 billion.

Back home, more than $10 billion was raised by Indian startups in Q3 CY21—an increase of roughly 41% on the previous quarter that has largely been driven by three sectors: FinTech, EdTech and SaaS.

This is the first time that funding into privately-held Indian start-ups has crossed $10 billion in a single quarter (Q3 CY21) across approximately 350 deals.

This data, released by PWC and Venture Intelligence, reads startups have “leveraged the accelerated digital adoption seen amongst businesses and individuals alike to create newer business models.”

Many new ideas in the FinTech and EdTech sectors appealed to investors. The study reveals that investments in software as a service or SaaS companies saw a significant increase in the first three quarters of 2021 across 183 businesses, indicating top tech talent India has to offer.

Perhaps there was never a better time to be a tech billionaire as funding into startups has been at its peak in India, but globally as well.

In the first three quarters of 2021, 371 new companies attained unicorn status, said the report. The startup industry saw increased funding activity and a rise in valuations. But an increase in funding activity was seen across all sectors, both in terms of value and volume.

The largest number of deals—183—worth $3.3 billion took place in the SaaS space in July, August and September, followed by Fintech at 128 deals worth $4.6 billion. In terms of deal size, Fintech topped the charts in this period.

Startups remain an urban phenomenon with NCR and Bengaluru emerging as the favourite cities for the talent as well as funders as they attracted 76–78% of the total VC/PE funding activity in the country.

The most active investor was Sequoia Capital which did 45 deals. With 13 in Fintech, eight in SaaS, six in D2C (direct to consumer platforms), three in B2B E-commerce, two each in AgriTech, HealthTech, and Media and entertainment, and one each in B2C E-commerce, EdTech, Logistics Tech, online gaming and Real Estate Tech. Four more deals covered other areas the report does not specify.

Accel was in second place but considerably behind Sequoia at 16 deals, followed by Matrix Partners which completed 14 deals. Blume Ventures, Elevation Capital, Lightspeed Ventures and Nexus Venture Partners were tied at 13 deals each.

PWC’s Amit Nawka, partner and leader, deals and start-ups says, “This data may not come as a surprise as headlines prominently featured the news of newer start-ups disrupting the status quo. Start-ups have leveraged the accelerated digital adoption seen amongst businesses and individuals alike to create newer business models.”

Funding into start-ups, he adds, “has been at its peak globally as well.”

Ankit Nagori, founder of Curefoods—an Indian health and fitness company that sells ‘digital and offline experiences across fitness, nutrition, and mental well-being'—says, “India is at the cusp of a really large digital revolution. Investors across the board are looking at long-term industry creation and hence making bets across various verticals. It’s the best time to be a digital entrepreneur in India. At Curefoods, we are looking to build and acquire digital native food brands.”