That figure grew 55% from 2018, says the IVCA-Bain India Venture Capital Report.

2019 was a banner year for the Indian VC industry, says the IVCA-Bain India Venture Capital Report. Investors deployed a record-breaking $10 billion, up 55% from 2018, with deal volume surging 30%. The average deal size rose by 20% in 2019.

Further, average deal ticket sizes surged across all stages of investment.

Sector interest

VC investors were most interested in four sectors, where they deployed 80% of their funding. These were consumer tech, software/Saas, fintech, and B2B commerce and tech.

Consumer tech accounted for 35% of investments with several deals executed of more than $ 150 million. Hot areas in consumer tech were verticalized e-commerce companies, health tech, food tech, and edtech.

Exits and funds

The average exit value was $39 million, and as in 2018, secondary sales were the exit mode of choice.

India focused VC funds raised about $2.1 billion in 2019, slightly lower than in 2018. However, the outlook for 2020 remains positive, the report said.

Encouragingly, several new funds started to invest in India during 2019.

“The start-up ecosystem in India remains robust and is rapidly growing. Between 2012 and 2019, the number of start-ups in India increased by 17% each year, while funded start-ups increased faster at 19% CAGR in the same period. Currently, of almost 80,000 start-ups in India, only about 8% are funded, indicating room for investments. India’s unicorn tribe also continues to grow with several firms in e-commerce, SaaS and Fintech currently leading the way.”

Despite the ebullient investments in 2019, investors were still sitting on dry powder worth $7 billion at end-2019.

This bodes well for VC activity in 2020.

“Despite the global economic climate, India’s start-up and VC ecosystems continue to thrive as investors take a long-term view based on the country’s growth potential. They see the current slowdown as more cyclical than structural.

“We go into 2020 with record-high levels of dry powder, counter-balanced with caution, and an underlying optimism in the long-term potential for the ecosystem.”

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