India Witnessed Strong Rebound in VC Investment: KPMG
India reported 294 venture capital deals valued at 3.16 billion dollars in Q4 2020 despite global uncertainty resulting from several ongoing events including the Covid-19 pandemic, according to Q4 edition of KPMG Private Enterprise Venture Pulse report.
It said VC investment in India continues to focus primarily on sectors considered to be beneficiaries of the Covid-19 pandemic.
During Q4 2020, for example, home delivery, marketplace platforms and e-commerce were the hottest areas of investment, attracting the majority of India’s funding rounds of 100 million dollars or more, including a 200 million dollar raise by marketplace platform Cars24, a 660 million dollar raise by food delivery company Zomato.
“There have been a number of sectors that have really benefited from the pandemic here in India,” said Nitish Poddar, partner and national leader for private equity at KPMG in India.
Interest in staples delivery — fresh food, groceries and the like — has grown quite significantly in recent months in addition to online retail and gaming. That has driven a lot of investment, he said.
“Then there is edtech. It has been an attractive area for VC investors for a couple of years now — but in 2020, that interest skyrocketed and so did the investments,” said Poddar.
After steadily rising throughout 2019, India saw a record quarter to close off the year. 2020 has been a mixed bag since but ended on a high note in terms of recovered volume, and also thanks to mega-deals saw significant rebounds in VC invested to close the back half of the year.
On a global level, said the report, VC investment remained strong quarter-over-quarter despite a drop from 83.2 billion dollars across 6,168 deals in Q3 2020 to 80.8 billion dollars across 5,418 deals in Q4 2020.
The Americas accounted for more than half of VC investment globally during Q4 with 41 billion dollars of investment across 2,725 deals. Of this, the United States accounted for 38.8 billion dollars across 2,526 deals.
VC investment in Europe set a second straight quarterly record with 14.3 billion dollars raised across 1,192 deals compared to 13.8 billion dollars cross 1,473 deals in Q3.
VC investment in the Asia Pacific region remained strong, rising slightly from 24.5 billion dollars in Q3 to 25.2 billion dollars in Q4.
China accounted for the top five largest VC deals in the world during Q4 while global VC-backed exit activity reached a record high of 189 billion dollars in Q4 as the march of unicorn exits continued with high profile IPO exits.
In Q1 2021, global VC investment is expected to remain quite high given the large amount of dry powder in market, low interest rates in many regions of the world and increasing drive of corporates for digital transformation.
IPO and M&A activity is also expected to remain very robust as other unicorns look to exit, said the report.